The Company’s board of directors, general manager or CEO, managing director, and senior executives shall be held liable, in accordance with their respective mandates, for the Company’s violation of the provisions of these Rules, the Real Estate Finance Law and its Implementing Regulations as well as the Finance Companies Control Law and its Implementing Regulations.

The Company shall comply with the Requirements for Appointments to Senior Positions in Financial Institutions Supervised by SAMA.

The Company shall not combine an executive function with a supervisory function. Functions must be separated in order to ensure the application of the recognized procedures, policies and technical standards to protect the Company’s assets and funds and prevent fraud and embezzlement.

The Company shall have sufficient and qualified human resources in terms of knowledge and expertise consistent with the Company’s operational needs, business activities, and risk profile. Bonuses and incentives of staff shall be fair and in line with the Company’s risk management strategy, and shall not create a conflict of interest.

The Company shall comply with applicable laws, regulations and instructions, and must take the necessary measures and procedures to avoid breaching their provisions.

The compliance officer shall submit a semiannual compliance report to the audit committee, and then to the board for review. The report shall identify the main compliance-related risks facing the Company, analyze existing processes and procedures and assess their effectiveness, and suggest any amendments or changes.

The compliance department must have staff and resources commensurate with the business model and size of the Company. Compliance employees must report solely to the head of compliance.

The Company shall comply with the legal requirements mentioned in the Anti-Money Laundering Law, Combating Terrorism Crimes and their Financing Law, their Implementing Regulations, and the relevant rules and guidelines as specified by SAMA, in a manner that is consistent with the nature and size of the Company’s activity and the risks it may be exposed to. The Company shall also comply with the requirements and instructions issued by SAMA on financial crimes and fraud.

The Company shall provide SAMA with prudential data at the specified times as per the forms, controls and instructions set by SAMA.

The Company shall obtain a no-objection letter from SAMA prior to the approval of any distribution of profits. Such distribution must not cause capital adequacy or liquidity to drop below the levels required in accordance with the rules, requirements and standards determined by SAMA.

The Company shall obtain a no-objection letter from SAMA prior to the launch of any new finance products or modification of any existing products.

The Company shall bear the expenses of any third party appointed by SAMA to perform any of the procedures taken in line with the provisions of this Chapter.

The Company shall publish its audited annual financial statements and the board’s report within a maximum of five working days after being provided to SAMA. It shall also publish any other report that SAMA may request.

These Rules shall be read in conjunction with the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H and its Implementing Regulations, the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/8/1433H, and it’s Implementing Regulations.

Without prejudice to the provisions of the Laws and their Implementing Regulations, SAMA may exempt the Company from some of the provisions of these Rules without negatively affecting the sector.

These Rules shall enter into force (180) days after the date of their publication.

1- The terms and phrases mentioned in these Rules shall have the same meanings stated in the Finance Companies Control Law.

2- The following terms and phrases, wherever mentioned in this document, shall have the meanings assigned to them unless the context otherwise requires:

SAMA: The Saudi Central Bank.

Law: Finance Companies Control Law.

Rules: The Rules Governing BNPL Companies.

BNPL Activity: A type of financing that allows a consumer to purchase goods or services without a term cost payable by the consumer.

BNPL Company: A joint stock company licensed by SAMA to engage in BNPL activity.

Consumer: Beneficiary of the activity

Stores: Sales outlets and places where goods and services are provided.

These Rules apply to companies licensed by SAMA to engage in BNPL activity.

The license application for engaging in BNPL activity shall be submitted to SAMA along with the following items:

Pursuant to the provisions of the Companies Law, the minimum capital for the BNPL company shall be SAR 5,000,000 (five million Saudi riyals), subject to increase or decrease by SAMA as it deems appropriate.

1. All candidates for supervisory and executive positions in a BNPL company shall:
2. Meet the professional eligibility requirements set by SAMA.
3. Be permanent residents of the Kingdom of Saudi Arabia.
4. Be theoretically and practically qualified and have sufficient experience in the field.
5. Meet any other requirements set by SAMA.

1. The applicant shall provide SAMA with any additional information or documents required by SAMA within 30 working days from the request date.
2. In case of failure to meet the period requirement specified in paragraph (1) of this Article, SAMA may reject the license application.
3. SAMA issues a written notice to the applicant after the completion of all the requirements set forth in the relevant rules and regulations.
4. SAMA informs the applicant of the initial approval or justified rejection in writing within 60 working days from the date the applicant receives notification of application completeness. Such initial approval does not constitute a license or permit to carry out the activity.

1. If a company is under establishment, the founding members shall satisfy the requirements necessary to engage in BNPL activity within six months from the date of initial approval, and provide SAMA with a copy of the commercial of failure to meet the requirements set out in this paragraph within the specified period, the approval shall be deemed expired. In addition, SAMA may extend the period for a maximum of another six months before the initial approval period expires.
2. In case of an existing company, it shall provide SAMA with a copy of the commercial register containing its BNPL activity within six months from the date of initial approval. In case of failure to meet the requirements set out in this paragraph within the specified period, the approval shall be deemed expired. Moreover, SAMA may extend the period for a maximum of another six months before the initial approval period expires.

1. SAMA takes any necessary actions to verify that the BNPL company meets all SAMA’s requirements. Such actions include making licensing visits; meeting the company’s executives; and reviewing the company’s systems, procedures and records.
2. SAMA issues a decision granting the applicant a license to engage in the activity after fulfilling all requirements and completing all procedures.
3. The BNPL company shall not engage in any activity other than the activity for which the license has been issued unless it obtains a prior written non-objection from SAMA.

The license shall be valid for five years and may be renewed by SAMA upon the BNPL company’s request. Such request must be submitted in writing, using the form designated by SAMA, at least three months before the expiry date of the license.

SAMA revokes the license upon the BNPL company’s request, taking into the account the rights of creditors and consumers as well as the soundness of the financial system.

SAMA charges fees as follows:

1. SAR 5,000 (five thousand Saudi riyals) for license issuance.
2. SAR 2,000 (two thousand Saudi riyals) for license renewal or amendment.

The BNPL company shall:

1. Develop appropriate written organizational policies that address, at least, the internal organization guides, governance, stores acceptance and approval procedures, purchase approval and cancellation, credit, risk management, compliance, information confidentiality and security, consumer data protection, outsourcing, human resources, and anti-money laundering and counter-terrorist financing (AML/CTF).
2. Ensure that technological and security equipment in place and related systems are adequate for its operational needs, nature of activity and risk status, in accordance with best practices and SAMA-issued instructions in this regard.
3. Design information technology systems and their processes in a manner that ensures data availability, integration, integrity, and confidentiality. Such systems and processes shall be assessed by the BNPL company on a periodic basis in accordance with the generally accepted technical standards. They shall also be tested before they are used for the first time and after any changes applied to them.
4. Retain all consumer documents, records and files in an orderly, clear and safe manner and ensure that all files are complete and updated periodically, for a period of at least 10 years from the date of the end of the relationship with the consumer.
5. Have sufficient and qualified human resources in terms of knowledge and expertise to meet its operational needs and risk status.

1. The BNPL company shall comply with the information security requirements set by SAMA and the relevant laws, regulations and instructions issued by SAMA.

2. The BNPL company shall comply with the legal requirements contained in the AML/CTF Laws, their Implementing Regulations, and the relevant rules and guidelines as specified by SAMA, in a manner that is consistent with the nature of the company’s activity and its size and the risks it may be exposed to. In addition, the company shall comply with the requirements and instructions issued by SAMA on financial crimes.

    

The BNPL company shall comply with the Rules on Outsourcing for Finance Companies issued by SAMA.

The BNPL company shall:

1. Comply with the Responsible Lending Principles for Retail Consumers issued by SAMA.
2. Verify and document the credit record of the consumer, with their consent, to confirm their solvency, repayment capacity and credit conduct.
3. Register the consumer’s credit information, with their consent, at one or more
4. of the companies licensed to collect credit information according to the relevant laws, regulations and instructions. Such information must be updated throughout the period of dealing with the consumer.
5. Set appropriate approvals and acknowledgments and allow consumers to read and agree to them before dealing with them, provided that such approvals and acknowledgments are shown as a pop-up window.
6. Adopt a clear, transparent and documented scientific method, criteria and procedures to evaluate the creditworthiness of the consumer and their repayment capacity, in accordance with best practices in this field.
7. Identify the consumer, verify their identity through a reliable and independent source, and document this in accordance with the regulations and instructions issued by SAMA.
8. Obligate contracted stores not pass or charge any additional fees to the consumer. The company shall also monitor the compliance, and provide them periodically with the required guidelines.
9. Maintain provisions for potential losses, defaults and risks in line with the International Accounting Standards and relevant SAMA-issued guidelines.

The BNPL company shall not:

1. Charge fees on the consumer, including fees owed to the company, contracted stores, or a third party. This excludes any delay penalties or debt collection fees imposed in accordance with the Debt Collection Regulations and Procedures for Individual Customers.
2. Launch any new products without obtaining prior written non-objection from SAMA.
3. Transact with a consumer under the age of (18) Hijri years.
4. Transact with a foreign consumer who is not a resident of Saudi Arabia, except after obtaining a written non-objection from SAMA.
5. Purchase goods or services in a currency other than the Saudi riyal, except after obtaining a written non-objection from SAMA.

1. Without prejudice to the deductible ratios specified in the Responsible Lending Principles for Retail Consumers, the total outstanding financing for each consumer natural person must not exceed an amount of SAR 5,000 (five thousand Saudi riyals), subject to increase or decrease by SAMA as it deems appropriate.
2. The number of installments granted to the consumer must not exceed a maximum of 12 installments.
3. Collection methods must be applied through electronic channels. Cash request is prohibited.
4. The total outstanding finance made through the company must not exceed 20 times the capital and reserves, except after obtaining a non-objection letter from SAMA. Additionally, SAMA may raise or lower the maximum limit of the total financing to the extent it deems appropriate.
5. The company shall not obtain financial facilities from non-licensed financiers, except after obtaining a non-objection letter from SAMA.

The BNPL company shall develop an appropriate written organizational policy that addresses potential conflicts of interest. Such policy must include adequate measures put in place to avoid and address any conflict of interest, ensuring fair treatment of all consumers and stores.

The BNPL company, through the means by which it carries out its activities, shall ensure, as a minimum, to:

1. Clarify and disclose all terms and conditions, security instructions, payment methods, information confidentiality and any other statements that must be disclosed according to relevant laws and instructions.
2. License Disclosure Instructions issued by SAMA.

The BNPL company shall draw up a finance (terms and conditions) contract with the consumer before any dealings, provided that it is presented clearly, easy to understand, and not misleading. The contract shall also be consistent with the relevant regulatory requirements and contain, as a minimum:

1. The information of the company and consumer (parties).
2. Finance term.
3. Type of goods or services, including their specifications and requirements (if any).
4. Involved parties’ rights and obligations
5. The amount, number and term of installments payable by the consumer, and the company’s commitment to notify the consumer of the monthly installment due date in advance.
6. Consequences of a delayed payment of installments.
7. Purchase order cancellation method, and refund procedures, conditions and process time.
8. Procedures for early payment and for compensating the company (when necessary) and how to determine such compensation.
9. Procedures for dealing with defaulting consumers.
10. Consumer’s permission to enter their information in the credit record.
11. Dispute resolution mechanism.
12. Any other data or information required by SAMA.

A contract must be drawn up in paper or electronic form between the company and stores in accordance with the relevant legal requirements. Each party shall receive a copy of the contract that must clarify, at least, the following:

1. Contract parties and their information.
2. Contract term, provided that the contract term is consistent with the validity of relevant permits or licenses of both parties.
3. Contract parties’ rights and obligations.
4. Pricing structure.
5. Withdrawal procedures and conditions.
6. Information confidentiality, privacy and security.
7. Customer protection provisions.
8. Compliance of the parties with the provisions of relevant laws, regulations, rules, guidelines and instructions.
9. Provisions of contract renewal and renegotiation.
10. Contract termination and expiration.
11. Reporting and escalation procedures and dispute resolution mechanism.
12. Any other data or information required by SAMA.

1. The BNPL company shall establish internal controls and procedures to ensure compliance with the provisions of the Law and these Rules and relevant laws, regulations and rules.
2. The company shall retain sufficient records to confirm compliance with the provisions of the Law and these Rules and relevant laws, regulations and instructions and shall take the necessary procedures to prevent any violation of their provisions.
3. The company shall not disclose any information to third parties, unless it obtains non-objection and such disclosure does not violate the provisions of relevant laws.
4. The company shall obtain a non-objection letter from SAMA before undergoing partial or complete liquidation.

Non-compliance with these Rules shall be deemed a violation of the Law.

The Rules shall come into force 30 days after the date of its publication on SAMA’s official website.

The license shall be granted for a term of five years and SAMA may renew it upon the request of the company. The company shall submit the renewal request to SAMA at least six months prior to the expiration of the license using the form set by SAMA.

Without prejudice to the provisions of the Finance Companies Control Law and other relevant instructions, a Consumer Microfinance Company may request to amend any condition or limitation in the license, provided that such request is based on reasonable justifications. Any documents, information or studies required by SAMA shall be attached to the request. If the amendment results in adding a new activity or amending the licensed activity, the relevant requirements of such activity shall be met in accordance with the Finance Companies Control Law and its Implementing Regulations, and the Rules of such activity.

Consumer Microfinance Company shall provide SAMA with precautionary data at the specified times as per the forms, controls and instructions set by SAMA.

A Consumer Microfinance Company shall obtain a non-objection letter from SAMA prior to approving any dividend distribution, and such distribution shall not lead to a decrease in the level of capital adequacy and liquidity in accordance with the rules, requirements and criteria set by SAMA.

A Consumer Microfinance Company must not obtain non-banking credit facilities or the like unless it has obtained a non-objection letter from SAMA.

The Consumer Microfinance Company must reimburse all costs of a third party appointed by SAMA as a consequence of procedures taken under this Chapter.

The Consumer Microfinance Company must comply with corporate governance rules determined by SAMA.

The Board shall form specialized committees to expand the scope of work in the areas requiring special expertise, including at least an audit committee, and shall specify their powers and monitor their performance.

It is prohibited in the Consumer Microfinance Company to combine an executive function such as financing or operation and oversight function such as internal audit or compliance tasks. A separation of functions must be adopted in a manner that ensures the application of the generally accepted policies, procedures, and technical standards, to protect the company’s assets and funds, and avoid fraud and embezzlement.

A Consumer Microfinance Company shall have sufficient and qualified human resources in terms of knowledge and expertise to meet its operational needs, business activities and risk situation. The remuneration and incentives of staff must be fair, in line with its risk management strategy, and must not create a conflict of interest.

A Consumer Microfinance Company shall obtain a no-objection letter from SAMA before outsourcing any finance services to a third party.

A Consumer Microfinance Company shall submit to SAMA the report referred to in Article (36) of this document, after being discussed and approved by the board or the competent committee, if any, along with the decisions made in this regard.

A Consumer Microfinance Company must comply with applicable laws, regulations and instructions. It must also take the necessary measures and procedures to avoid breaching its provisions.

The head of compliance must submit a compliance report to the audit committee semi-annually and then to the board for review. The compliance report must identify the main compliance-related risks facing the Consumer Microfinance Company, analyze existing processes and procedures and assess their viability, and suggest any amendments or changes.

The compliance department must have staff and resources commensurate with the business model and size of the Consumer Microfinance Company. Compliance employees must only report solely to the head of compliance.

A Consumer Microfinance Company, shall comply with the legal requirements mentioned in the Anti-Money Laundering Law, the Law on Terrorism Crimes and Financing, their Implementing Regulations, and the relevant instructions and guidelines as specified by SAMA, in a manner that is consistent with the nature and size of this company’s activity and risks it may be exposed to. A Consumer Microfinance Company, shall also comply with the requirements and instructions issued by SAMA on financial crimes and fraud.

The Consumer Microfinance Company shall maintain the working documents and audit reports that clearly show the work carried out as well as findings and recommendations and what has been accomplished regarding these recommendations.

A Consumer Microfinance Company shall obtain a non-objection letter from SAMA before launching any finance products or modifying any existing products.

A Consumer Microfinance Company shall fully abide by the Responsible Lending Principles for Individual Consumers issued by SAMA.

A Consumer Microfinance Company may provide unsecured finance in line with the risk management policy and procedures approved by its board of directors.

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

The Consumer Microfinance 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.

Insurance on finance risks shall be in accordance with the Cooperative Insurance Companies Control Law and its Implementing Regulations as well as instructions issued by SAMA.

Exposure includes the value of all assets that subject to any credit risks, including but not limited to, finance agreements; securities; and advanced payments to other entities and clients; all commitments or other obligations to grant finance or to make a payment or deliver assets to a third party with a right of recourse against a client or another third party, equity, participating interests and assets in respect of which the Consumer Microfinance Company is the lessor.

A Consumer Microfinance Company shall assess and rate risks related to each exposure before making any finance decision and review the risk rating at least once every two years.

The finance agreement shall bear on its forefront a summary containing the basic information of the finance product and the main provisions of the finance agreement in a clear language for the borrower, in accordance with the model determined by SAMA and documenting the receipt of this summary by the borrower in the finance file.

The Consumer Microfinance Company must use the declining balance method in distributing the term cost on the maturity period, whereas the term cost is distributed proportionally between installments on the basis of the balance value of the remaining amount of finance at the beginning of the installment maturity period, and including it in the finance agreement.

Fees, commissions and administrative service charges to be received by the Consumer Microfinance Company from the borrower shall not exceed the amount equivalent to (1%) of the finance amount.

The Consumer Microfinance Company shall establish a function for handling complaints, assign staff to such function, set clear procedures for receiving, documenting, reviewing, and responding to borrowers’ complaints within the period specified by SAMA, and keep such complaints in relevant records. All necessary details of borrowers’ complaints and related actions taken shall be included in the complaint records.

Without prejudice to the provisions of the Law, SAMA may exempt consumer microfinance companies from some of the provisions of these Rules as required by the conditions of the sector.

These Rules comes into effect as of the date of their publication on SAMA’s website.