Featured Product

    SAMA Rules on Management of Problem Loans and Bancassurance Activities

    February 13, 2020

    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.

     

    Related Links

    Keywords: Middle East and Africa, Saudi Arabia, Banking, Insurance, NPLs, Governance, Bancassurance Activity, Sharia Governance, Islamic Banking, SAMA

    Related Articles
    News

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    News

    US Agencies Propose Changes to Call Reports and Instructions

    Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.

    July 22, 2021 WebPage Regulatory News
    News

    PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker

    The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Examines Asset Encumbrance in Banking Sector

    The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Publishes Methodological Guide to Mystery Shopping

    The European Banking Authority (EBA) published a methodological guide to mystery shopping.

    July 21, 2021 WebPage Regulatory News
    News

    APRA Issues Update on Capital Reform Policy Settings for Banks

    The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.

    July 21, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Assess Continuity Planning of Market Infrastructures

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.

    July 21, 2021 WebPage Regulatory News
    News

    ESMA Responds to Proposal Related to Sustainability Standards Board

    The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.

    July 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7283