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  • Chapter Three: Finance Procedures

    • Article 57

       1.The Finance Company must, upon the approval of the Consumer verify his credit record to confirm his solvency, repayment capacity and credit conduct. The confirmation of such must be documented in the Finance file.
       2.The Finance Company must, upon the approval of the Borrower, register his credit information at one or more of the companies licensed to collect credit information in accordance to the relevant laws, regulations and instructions. Such information shall be updated throughout the period for dealing with the Borrower.
       3.The Finance Company must decline the Finance request in case of the absence of obtaining an approval from the Consumer or Borrower, specified in paragraphs 1 and 2 of this Article.

    • Article 58

       1.The Finance Company shall administrate levels for granting Finance shall be determined based on the type and Amount of Finance, including defining Finance types that require the approval of more than one person and the decision for acceptance or refusal of the Finance shall be subject to the powers granted for each administrative level. 
       2.The Finance Company must obtain a non-objecting letter from SAMA before extending any of the following: 
        a.Finance to a foreign Borrower that is not a resident in the Kingdom.
        b.Finance in a currency other than the Saudi riyal.

    • Article 59

       1.The Finance Company must follow a scientific method and a written, transparent and clear standards and procedures to asses credit worthiness of the applicant for the Finance and his ability to repay, according to the best practices in this field, and the Board must approve these standards and procedures and review them at least once every two years, and updating them if necessary. The Finance Company must apply these procedures before granting Finance and it shall be documented in the Finance file.
       2.Risks related to an Exposure must be evaluated and classified before the Finance decision is made. The risk classification must be reviewed at least annually.
       3.The Finance Company must define procedures for the early detection of risks to signal out Finance that show signs of increased risk and develop quantitative and qualitative indicators for the early identification of risks.

    • Article 60

       1.In accordance with the policy and procedures of risk management, approved by the Finance’s Company Board, the Finance must be by collaterals
       2.All collateral must be enforceable and capable of valuation in order to be acceptable. Personal guarantees must be evaluated based on the net assets and/or net earning of the guarantor.*
       3.The value and legal validity of collateral must be assessed prior to the granting of the Finance.
       4.If the value of the collateral is dependent to a substantial degree on the financial situation of a third party or fluctuations and conditions of the market, the collateral must be evaluated on a regular basis, and the procedures stated in the agreement to strengthen those collateral shall be taken when its value decreases. The counterparty risk of the third party must be reviewed as appropriate.
       5.Decisions of the collateral and reserve risks must be made by the control function.

      * This paragraph has been amended in accordance with His Excellency the Governor's Decision No. 72/M SH T, dated 20/06/1440H.

    • Article 61

      In exception to the provisions of Article 60 of this Regulation, the Finance Company may grant Finance without a collateral, if the following applies:

       1.The total Amount of Finance received by the Borrower, without collateral does not exceed (100,000) one hundred thousand Saudi riyal based on the data of the Borrower’s credit record.
       2.The Borrower has no history of un-settled debt, conflict or a standing credit lawsuit, insolvency, bankruptcy or liquidation through the past ten years, or checks without balance by him through the past five years, based on the data of the Borrower’s credit record.
       3.The Borrower must not be a related party.

    • Article 62

      The Finance Company must make provisions for contingent losses and risks in accordance with International Financial Reporting Standards. SAMA may require that the Finance Company to make an additional provision or more for contingent losses and risks.

    • Article 63

       1.The Finance Company must define cases in which an Exposure requires special Observation; these Exposures shall be reviewed on an ongoing basis to determine whether further actions may be required. There must be clear rules determining when a Finance must be transferred to personnel specializing in restructuring, scheduling or winding up.
       2.The Finance Company must define criteria for assets value reduction, provisioning Standards including country risks provisioning, taking into account of the International Financial Reporting Standards, and ensure that these are applied consistently.