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
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.