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

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BCBS Issues Climate Risk Principles while HKMA Expresses Its Support

    The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.

    June 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8280