SAMA issued rules and guidelines on the management of problem loans. SAMA issued the guidelines as good practices to support banks in implementing the rules on management of problem loans. SAMA also published the draft rules governing bancassurance activities. These activities are defined as marketing and distribution of insurance products by a bank to its clients on behalf of an insurance company. Additionally, SAMA published the Sharia governance framework for banks, to implement effective Sharia governance requirements for banks and to align Islamic banking transactions with the provisions and principles of Sharia.
Rules and Guidelines on Management of Problem Loans—The rules are applicable for all banks licensed under Banking Control Law. SAMA rules include requirements on the early prevention and identification of problem loans where banks should develop a clear, robust, and demonstrable set of policies, procedures, tools, and governance around the establishment of early warning signals, which are fully integrated into banks’ risk management systems. The objectives of the rules are to ensure that banks
- Put in place a conceptual framework, which would facilitate rehabilitation of viable borrower, thereby supporting economic activity
- Look into aspects of customer conduct and fair treatment whilst dealing with problem loans, especially in instances involving the micro, small and medium enterprises
- Have adequate controls over nonperforming and problem loan management and restructuring processes, including documented policies and procedures
Draft Rules Governing Bancassurance Activities—The objective of these rules is to regulate bancassurance activities and practices in Saudi Arabia and the associated relationship between the insurance company and the bank. The key topics covered in the draft rules are related to requirements for practicing bancassurance activities, bank and insurance company's obligations, rules of professional conduct, agreement termination procedure, and consequences of non-compliance. The rules require that the bancassurance activities shall be practiced directly through the bank. The contractual relationship between the insurance company and the bank (in the context of conducting bancassurance activities) shall not include insurance agency, insurance brokerage, insurance advisory, or any insurance-related profession, but merely establishing a channel for marketing and distribution.
Sharia Governance Framework for Banks—This framework aims to enhance the environment for compliance with the legal provisions and principles of banks. It also aims to define the tasks and responsibilities of the Board of Directors, the executive management, the Sharia committee, compliance management, risk management, and the internal audit department, regarding implementation of the requirements of this framework.
- Summary of Rules and Guidelines on Management of Problem Loans (PDF)
- Rules on Management of Problem Loans (PDF)
- Guidelines on Management of Problem Loans (PDF)
- Consultation on Rules Governing Bancassurance Activities
- Sharia Governance Framework for Banks (PDF in Arabic)
Keywords: Middle East and Africa, Saudi Arabia, Banking, Insurance, NPLs, Governance, Bancassurance Activity, Sharia Governance, Islamic Banking, SAMA
Previous ArticleEC Rule Updates Data for Calculations Under Solvency II Reporting
Next ArticleFDIC Publishes Annual Report for 2019
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.