Each of the following words and phrases, wherever it appears in this Regulation, shall have the meaning following it in this article unless the context indicates otherwise:

Adequate notice: a printed notice to a Borrower that sets forth clearly the pertinent facts so that the Borrower may reasonably be expected to have noticed it and understood its meaning. The notice may be given by Guaranteed Communication Means reasonably assuring receipt by the Borrower.

Advertisement: a commercial message in any medium that promotes, directly or indirectly, a Financing product.

Amount of Financing: the limit or the total amount made available to a Borrower under a Financing Contract.

Annual Percentage Rate or APR: the discount rate at which the present value of all payments and installments that are due from the Borrower, representing the Total Amount Payable by the Borrower, equals the present value of all payments of the Amount of Financing available to the Borrower on the date on which the Financing amount or the first payment thereof is available to the Borrower, calculated in accordance with Annex 1.

Authenticated Communication: Borrower instructions received through a recorded, verifiable and retrievable medium such as paper, electronic or verbal recording.

Borrower: a natural person who, in Financing transactions covered by this Regulation, obtains Financing for purposes outside his trade or profession.

Business Day: a day on which the banks are open for business to the general public.

Calendar Day: any day in a month, including weekends and holidays.

Change in Circumstance: death, disability (partial or total), retirement (mandatory or voluntary), loss of job or bankruptcy of a Borrower*.

Consumer Financing: a Financing granted to a Borrower as follows:

1. The Financing is for purposes unconnected with the Borrower’s commercial or professional activity, generally including personal Financing, car Financing, home improvement Financing, and similar products as approved by SAMA.
2. Such Financing is granted for the purchase of goods and services for consumption or other needs of the Borrower as identified above, e.g. for the purchase of furniture, consumer durables, automobiles, household items, education, etc.
3. Real estate Financing and Finance Leasing are excluded.
4. Financing against shares (Margin Lending) is also excluded.

Creditor: a bank licensed and authorized by the Saudi Central Bank.

Default: any breach of the terms and conditions of the Financing Contract and the nonpayment by a Borrower of their monthly installment for 90 Calendar Days from its due date.

Default Notice: a notice from a Creditor to a Borrower under a Financing Contract with the Creditor notifying that he/she is delinquent in payments.

Draw-down: an Amount of Financing drawn by the Borrower under a Financing Contract.

Financing: the right to incur new debt and defer payment, or the right to defer existing debt.

Financing Contract: an agreement by which a Creditor grants, or promises to grant, a Consumer Financing or similar financial accommodation to a Borrower.

Gross Salary basic monthly salary (less GOSI and pensions contributions) plus all fixed allowances paid to Borrower by the employer on a monthly basis.

Guarantee Agreement: an ancillary agreement concluded by a Guarantor and guaranteeing or promising to guarantee the fulfillment of any form of Financing granted to a Borrower.

Guaranteed Communication Means: registered mail, hand delivery, and any recorded, verifiable and retrievable electronic medium.

Guarantor: a natural person who guarantees or promises to guarantee the fulfillment of any Financing granted to a Borrower.

Initial Disclosure: the information required to be provided to the Borrower by a Creditor upon opening a Consumer Financing account in accordance with Section 5 of these Regulations.

Licensed Credit Bureau: a credit information company licensed by SAMA to collect and maintain credit information on consumers and provide the same to members upon request.

Optional Feature: features and services which are not part of the standard features or services of the Financing Contract product, requiring payment of additional fees and/or Term Cost by the Borrower.

Outsourcing: an arrangement under which a third party (i.e. a service provider) undertakes to provide a Creditor with a service previously carried out by the Creditor itself or a new service to be launched by the Creditor. Outsourcing can be to a service provider in Saudi Arabia or overseas and the service provider may be a unit of the same Creditor (e.g. head office or an overseas branch), an affiliated company of the Creditor's group or an independent third party, and is subject to the requirement to fully comply with SAMA Rules on Outsourcing issued vide 34720/BCS/424 dated 17/7/1429H Correspondent to 20/7/2008.

Refinancing: repayment of an existing Financing from the proceeds of a new Financing granted to the Borrower.

Repayments or Deductions: deductions from the Gross Salary or monthly pension entitlement of a Borrower towards repayment of Financing. Only deductions for Real Estate Financing repayments and divorce settlements are excluded.

SAMA: the Saudi Central bank**.

Satisfactorily Resolved: resolution of the dispute in accordance with the procedures and timeframes for resolving disputes.

Secured Financing: a Financing that is collateralized by assignment of rights to property including a security interest in personal property or real estate taken by the Creditor as collateral. A Financing may be secured by pledge of cash (deposits), tangible goods or other collateral.

Term Cost: the term cost due and payable by the Borrower under the Financing Contract; this must be expressed as a fixed annual percentage of the Amount of Financing obtained by the Borrower.

Term to Maturity: the period from initial disbursement to the date on which the final repayment of the relevant Financing is due.

Total Cost of Financing: all costs payable by the Borrower under a Financing Contract other than the Amount of Financing, including Term Cost, fees, commissions, administrative services fees, insurance, and any charges required to obtain Financing, but excluding any expenses the Borrower can avoid, such as costs or fees due and payable by the Borrower as a result of the Borrower's breach of any obligations contained in the Financing Contract.

Total Amount Payable by the Borrower: the Amount of Financing plus the Total Cost of Financing. 

*The definition of "Change in Circumstance" has been amended in accordance with Circular No (381000095088) dated 10/09/1438H. The amended definition is currently available only in Arabic.

** The "Saudi Arabian Monetary Agency" was replaced By the "Saudi Central Bank" in accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding in 26/11/2020G.

1. These Regulations apply to all kinds of Consumer Financing.
2. These Regulations do not apply to lease or real estate Financing or margin lending.

1. For the purposes of these Regulations, Consumer Financing is granted under a Financing Contract in case of any of the following:
   1. The repayment of a debt owed by a person (the Borrower) to another (the Creditor) is deferred; or
   2. a person (Borrower) incurs a deferred debt to another (Creditor).
2. For the purpose of complying with Article 14(1), the Creditor must calculate the Amount of Financing based on the Borrower's Gross Salary or monthly pension entitlement (as the case may be) when the application for Financing is submitted.

1. A Financing Contract or Guarantee Agreement must be in the form of-
   1. a written contract document signed by the Borrower or Guarantor and the Creditor; or
   2. a written contract document signed by the Creditor and constituting an offer to the Borrower that is accepted in writing by the Borrower.
2. All Financing Contracts, application forms, Guarantee Agreements, repayment schedules, Borrower acknowledgement letter and other documentation related to Consumer Financing must be in Arabic and if the Borrower requests that documentation be prepared in English, the documentation shall be prepared in both languages. The Creditor must provide copies thereof to the Borrower. In the event of a divergence between the Arabic and the English text of any such document, the Arabic text prevails.
3. Each contracting party must receive a copy of the Financing Contract or Guarantee Agreement (as the case may be).

Any amendment (including any addition to) of a Financing Contract by the Creditor after it has been signed by the Borrower is invalid unless the Borrower has agreed in writing.

If a Financing Contract or Guarantee Agreement needed to be signed by the Borrower or Guarantor and returned to the Creditor, the Creditor must give each of the Borrower or Guarantor, as applicable, a signed copy they may keep, not later than 10 Calendar Days after the Financing Contract or Guarantee Agreement has been entered into.

1. The APR must include all mandatory charges or costs under a Consumer Financing as shown in the relevant advertising notices or materials.
2. The Financing Contract must stipulate the use of the declining balance method in distributing the Term Cost over the maturity period, which means that the Term Cost is allocated pro-rata to installments based on the remaining balance of the Amount of Financing at the beginning of the period for which an installment is due.
3. The Term Cost is fixed.

All fees, costs and administrative services charges to be recovered from the Borrower by the Creditor must not exceed the equivalent of (1%) of the Amount of Financing or (5,000) five thousand Saudi riyals, whichever is lower.

1. The Borrower may, by giving written notice to the Creditor within 10 Calendar Days from the date of execution of a Financing Contract, terminate the Financing Contract, unless
   1. Draw-down of any part of the Amount of Financing has occurred; or
   2. A credit card or other means of obtaining Financing provided to the Borrower by the Creditor has been used to acquire goods or services for which Financing is to be advanced under the Financing Contract.
2. In the event of termination under Article 10(1), the Creditor may not charge or claim any Term Cost and or fees from the Borrower unless the conditions under Article 10(1)(a) or (b) above have been met.

1. A Creditor must accept any payment under a Financing Contract before its due date as partial payment if it is equivalent to one full installment or multiples thereof.
2. A Creditor must credit each payment made under a Financing Contract to the Borrower's account promptly after receipt of such payment.
3. The Borrower may prepay, at any time, the remaining Amount of Financing without incurring any Term Cost for the remaining period. The Creditor is entitled to compensation from the Borrower for the following:
   1. The cost of re-investment, which may not exceed the Term Cost for the three months following the payment, calculated on the basis of a declining balance; and
   2. The expenses the Creditor pays to a third party as a consequence of the Financing Contract for the remaining period of the Consumer Financing if such expenses are unrecoverable, and provided that such expenses are properly recorded in the Borrower's Financing file.
4. The Creditor must notify the Borrower in writing of all such fees payable by the Borrower as referenced under Art. 11(3)(a)and (b) above. The Creditor must give that notification by Guaranteed Communication Means within 10 Business Days after the first to occur of:
   1. receipt by the Creditor of a notice from the Borrower of the intended prepayment; or
   2. receipt by the Creditor of the prepayment,

1. Creditors must quickly facilitate the transfer of balance(s) to other Creditors in the Consumer Financing accounts of their Borrowers. Creditors must not unreasonably withhold their consent to a balance transfer request they receive.
2. Creditors may not unreasonably withhold the issuance of a balance statement or certificate of outstanding liabilities requested by the Borrower; these must be issued within 7 Business Days from the date of request.

1. If the Creditor assigns rights under a Financing Contract or the Financing Contract itself to a third party or issues securities against rights under the Financing Contract, the Borrower may use against the assignee any defense that would have been available to him against the original Creditor.
2. The Creditor must receive a no-objection letter from SAMA before he can assign a Consumer Financing or a portfolio of Consumer Financings to another party.

1. Before granting a new Consumer Financing or increasing the limit of any Consumer Financing and without prejudice to the requirements of any applicable law or regulation, a Creditor must ensure that the total monthly Repayments or Deductions recovered from a Borrower under his Consumer Financing obligations to all Creditors do not exceed 33.33% of the Borrower's Gross Salary during the period in which those Repayments or Deductions are made. For retired Borrowers, the deduction limit is 25% of their monthly pension.
2. The Creditor must first obtain the Borrower's prior approval and then obtain and examine the credit record of the Borrower from one or more of the Licensed Credit Bureaus, to confirm the Borrower's compliance with the requirement under Article 14(1), his solvency, repayment capacity and credit conduct. The confirmation of such prior approval by the Borrower must be documented in the Borrower's Financing file.
3. The Creditor must, upon the approval of the Borrower, register the Borrower's credit information with one or more of the Licensed Credit Bureaus in accordance with the relevant laws, regulations and instructions. Such information shall be updated throughout the period of dealing with the Borrower.
4. The Creditor must decline a Financing request if he does not obtain the approval of the Borrower as referred to in Article 14(2) and 14(3) above.
5. Creditors must ensure that the maximum Term to Maturity of a Consumer Financing does not exceed 5 years from the date of initial disbursement.
6. *In the event of a Change in Circumstance of the Borrower, Creditors may reschedule the repayment terms of the Consumer Financing (provided no new Financing is being granted and without any change to the Term Cost under the original Financing Contract) in accordance their credit policies. Creditors must provide SAMA with a half-yearly report of all Consumer Financings that have been rescheduled.
7. In calculating the maximum deductions of one third (33.33%) for Borrowers and one fourth (25%) for pensioners, Creditors must include all Consumer Financing Repayments or Deductions, including the minimum monthly payment required for all credit cards issued to the Borrower.

*Article 14(6) has been amended in accordance to Circular No (381000095088) dated 10/09/1438H. The amended article is currently available only in Arabic.

1. Consumer Financing granted on the basis of any security other than the deduction of salary or pension payments (e.g. against lien of deposits or assignment of other regular earnings or pledge of collateral) is not subject to the provisions under Article 14(1).
2. A Creditor must carry out proper risk management procedures such as the use of credit scoring models for the granting or renewal of all Consumer Financings and must assign appropriate credit limits to its Borrowers.
3. Prior to granting a new Consumer Financing, a Creditor must have received a Borrower request through Authenticated Communication or the execution of a Financing Contract. A Creditor may not increase the Financing limit of its Borrower without receiving a request through Authenticated Communication from its Borrower seeking such an increase. Each such increase/amendment in the Financing Contract requires execution of a new Financing Contract.
4. Creditors are required to obtain knowledge of the purpose of the Consumer Financing from the Borrower and document that. This confirmation must be a part of a written acknowledgment by the Borrower clearly stating that he has fully understood the terms and conditions and confirms the execution of the respective Financing Contract.
5. Creditors are only allowed to refinance Consumer Financing accounts of those Borrowers who have repaid at least 20% of their original Amount of Financing under their Consumer Financing account.
6. Creditors refinancing the Consumer Financing accounts of their Borrowers must fully comply with the disclosure requirements under Section 5, Additionally, the Borrower must be provided with a break-down of the refinanced amount, clearly identifying the refinanced amount that will credited to his/her account, net of all identified fees and charges and the settlement of the original outstanding balance prior to a Refinancing.
7. Borrowers opting for early retirement are required to ensure that their pension payments continue to be routed to the Creditor in the event of outstanding balances under their Consumer Financing account. A Creditor may require a suitable undertaking from the Borrower affirming the foregoing arrangement.
8. Additional features or services requiring additional payment of fees and charges which are optional to the primary product features of the Consumer Financing may not be added on or embedded into the Consumer Financing account and must be clearly represented as an Optional Feature. A Borrower must have indicated his/her desire to obtain such services by Authenticated Communication before their inclusion in the account. Creditors must also clearly disclose all fees and charges for these services to the Borrower within their offer for such Optional Features.
9. A Creditor must promptly advise its Borrowers of the following amendments and or changes in their Financing Contract by giving them at least 30 Calendar Days prior written notice:

            (a) any increase of the annual fees and/or handling fees charged to the Borrower;

            (b) an increase in recurring fees or charges

            (c) any new fees or charges.

            (d) any other changes.

10. The Borrower may terminate the relevant Financing Contract with the Creditor if he/she does not agree to such amendment, change or modification by notifying the Creditor of his/her desire to terminate the Financing Contract within ten (10) Calendar Days after his/her receipt through Authenticated Communication of the notification of the aforementioned changes, subject to full settlement of all outstanding balances on the Consumer Financing account. The aforementioned notice must advise Borrowers of the 10 Calendar Day termination period.
11. A Creditor engaging in Outsourcing any component of its Consumer Financing Business must comply with the Rules on Outsourcing issued by SAMA.
12. A Creditor is required to implement a clearly defined Code of Conduct for employees engaged in roles involving sales and marketing of Consumer Financing products and follow-up and collection of impaired and delinquent Consumer Financing Accounts. (Creditors are also required to be in compliance with SAMA circular MAT/8211 dated 1/4/1431H.) A Creditor must provide those employees with a copy of the Code of Conduct and obtain their acknowledgement of receipt. The Code of Conduct must prohibit the following:

13. Creditors are required to have structured training programs for all new staff and Consumer Financing product knowledge programs for staff involved in marketing and sales and customer service for Consumer Financing products.
14. A Creditor must issue procedural rules to handle Borrower complaints relating to Consumer Financings and to ensure that Borrowers are made aware of the procedure and contact details of the complaint handling unit/department.
15. If a Borrowers' application for any Financing facility is declined, the Creditor must provide the Borrower with a written reason for the rejection through Guaranteed Communication Means.
16. Upon full and final repayment of the Consumer Financing by the Borrower, the Creditor is required to issue a no liability or clearance letter within 7 Business Days from the date of full and final settlement und update his record with a Licensed Credit Bureau.

1. A Creditor may only proceed to enforcement against a Guarantor if the Borrower is in Default and has failed to comply with a Default Notice for a period of not less than 30 Calendar Days from the date of receipt.
2. Creditors, their representatives, and any other assignees of the Creditor's rights under the Financing Contract or Guarantee Agreement may not take disproportionate, excessive or unreasonable measures to recover amounts due to them in the event of non-performance of aforementioned agreements
3. A Creditor may demand immediate repayment in the event of Default only through a Default Notice requesting the Borrower, or where applicable, the Guarantor to comply with his/her obligations under the Agreement within 30 Calendar Days from the date of the issuance of notice.
4. A Default Notice is not required in the event of any of the following:

5. A Creditor may suspend Draw-downs under a Financing Contract in the event of a failure by either the Borrower or the Guarantor to abide by its terms and conditions in a Default. However the Creditor is required to give notice of its intent to suspend Draw-downs to the Borrower and the Guarantor (if any) without delay.
6. A Creditor is required to provide without delay and upon request of the Borrower, a detailed statement of account incorporating all applicable fees, Term Cost and charges including any administrative charges, free of charge in the event of a Default or prepayment of the Consumer Financing.
7. A Creditor may not bring an action for the enforcement of security over goods pledged as collateral without first obtaining approval from the Committee for Settlement of Banking Disputes if:

1. The Creditor must indicate in all product advertisements its name, logo, any identifying representation and contact details.
2. The advertisement must disclose, in a manner that is clear to the Borrower, the name and Annual Percentage Rate of the advertised product and shall not include other rates such as the Term Cost.
3. The Creditor may not do any of the following:

4. SAMA may require any Creditor who does not abide by the provisions of this Article to withdraw the advertisement within one Business Day of notice SAMA from to that effect.
5. Furthermore, SAMA may take other punitive actions as required.

A Creditor is required to provide the Borrower in writing with the Initial Disclosure information stated in Article 21 below. The Initial Disclosure must be made in clear and easy-to-read language duly highlighting terms and conditions which may affect the Borrower's rights and obligations, and the Creditor must use any format specified by SAMA from time for that purpose. Furthermore, the specific terms contained under Article 21 (1) (b) and (c) and information on the Total Cost of Financing must be included in the Initial Disclosure statement.

1. For the purpose of these Regulations, a Creditor must provide the Borrower with a written disclosure statement that provides the information required by these Regulations to be disclosed.
2. A disclosure statement may be part of a Financing Contract or an application for a Consumer Financing or may be an annex to the foregoing documents.
3. The Creditor is required to obtain written acknowledgement from the Borrower confirming he/she has received and read the Initial Disclosure statement.
4. Information disclosed in a disclosure statement may be based on a reasonable assumption or estimate and such information must be clearly identified to the Borrower as an assumption or estimate.
5. A disclosure statement, or consent in relation to a disclosure statement, must be in plain, clear and concise language. It must be presented in a manner that is logical and likely to bring to the Borrower's attention the information required by these Regulations to be disclosed.
6. If the Borrower consents by Authenticated Communication, the disclosure statement may be provided by electronic means in an electronic form that the Borrower can retrieve and retain.
7. A disclosure statement is deemed to be provided to the Borrower:

A Creditor that proposes to enter into a Financing Contract with a Borrower must provide the Borrower with the Initial Disclosure statement required by these Regulations prior to or upon entering into the Financing Contract by the Borrower and the Creditor.

1. A Creditor that enters into a Financing Contract with a Borrower must provide the Borrower with an Initial Disclosure statement that includes the following information:

2. If the initial limit of the Financing is not known when the Initial Disclosure statement is made, the Creditor must disclose it in:

3. If a Financing Contract is amended, the Creditor must, in writing and within 30 Calendar Days or more before the amendment takes effect, disclose to the Borrower and Guarantor (if any), any changes to the agreement pertaining to items referred to under Article 21(1) except changes to the following:

4. An amendment referred to in Article 21(3) must be disclosed in the first statement that is provided to the Borrower after the amendment is made.
5. If a Creditor offers to defer or skip a payment or installment under a Financing Contract, the Creditor must, with the offer, disclose in a prominent manner whether Term Cost will continue to accrue during any period covered by the offer if the offer is accepted. Creditors must ensure compliance with Article 14(5), i.e. the maximum Term to Maturity may not exceed 5 years.

1. A Creditor must deliver at least on a quarterly basis to each Borrower a statement of his/her Consumer Financing transaction amounts in writing or through electronic medium (such as e-statement) as agreed with the Borrower in advance. The account statement should fully disclose the following information:

2. The address for notification of account statement errors: The address or telephone number to be used for notification of account statement errors or any other enquiries that a Borrower may have on the account statement.
3. The time period allowed to the Borrower to verify the accuracy of transactions as annotated in the account statement after which the account statement is binding: This period shall not be less than 30 Calendar Days as of the date of sending the statement via Guaranteed Communication Means
4. The Saudi Riyal shall be used as a basis for calculating all transactions and charges of Consumer Financing, and it shall be used in all disclosures of monetary values for Consumer Financing accounts denominated in Saudi Riyal. For Consumer Financing accounts denominated in currencies other than Saudi Riyal, the basis for calculation will be their respective currency of account.
5. If the Creditor wants to change the charges related to the Consumer Financing account or the method of paying due amounts, it must notify the Borrower of such change within a period of at least 60 Calendar Days prior to its application. The notice shall be mailed or delivered by Guaranteed Communication Means to the address on record of the Borrower.
6. The Borrower is required to keep the Creditor's records updated with his/her latest address and to immediately notify the Creditor of any change in his/her contact details in writing or by Authenticated Communication. Failure to provide this information will release the Creditor from any liabilities and obligations under Article 22.5 above.

1. The term “account statement error/dispute” means any transaction posted to the Borrower's Consumer Financing account, resulting in an error in the overall balance. Account statement errors shall include the following:

2. The term “notice of account statement error”/dispute means a written notification given by a Borrower to the Creditor, using the contact information as included within the said account statement or other information supplied by the Creditor, and it must meet the following requirements:

3. The Creditor must address account statement errors/disputes as follows:

4. If the account statement error/dispute has not been Satisfactorily Resolved, the Borrower shall not be obliged to pay the portion of the required payment that the Borrower believes is related to the disputed amount, including Term Cost or any other charges. The Creditor may not try to collect any amount, Term Cost or other charges related to the account statement error/dispute until the dispute is Satisfactorily Resolved.
5. The Creditor must not make or threaten to make an improper report about the Borrower's credit standing, or report that an amount or account is delinquent prior to the error/dispute being Satisfactorily Resolved, because the Borrower did not pay the disputed amount or relevant Term Cost or other charges during the error/dispute resolution process in any event, not earlier than 90 Calendar Days from the date of the notice of account statement error/dispute.
6. If the Creditor determines that an account statement error has occurred as stated by the Borrower, it must correct the error and pay back any disputed amount and relevant Term Cost and other charges debited on the Borrower's account and deliver by Guaranteed Communication means a correction notice to the Borrower.
7. If the Creditor determines that a different account statement error other than the one identified in the Borrower’s notice has occurred, the Creditor must mail or deliver by Guaranteed Communication Means to the Borrower the Creditor's reasons for believing that a different account statement error has occurred and the reasons for the belief that the error alleged by the Borrower is incorrect. The Creditor shall correct the error and credit the Borrower’s account with the correct amount in accordance with procedures in force.
8. If the Creditor determines that no account statement error has occurred, it must mail or deliver by Guaranteed Communication Means to the Borrower an explanation of the reasons of believing that the error alleged by the Borrower is incorrect and provide the Borrower with copies of any documented evidence if he/she so requests.
9. If the Creditor believes that a Borrower is liable for all or part of the disputed amount and relevant Term Cost and other charges, it must:

10. Without prejudice to applicable law and regulation, a Creditor that has fully complied with the requirements of this section shall not have further responsibilities under this section if the Borrower insists on his/her claim.
11. The Committee for Settlement of Banking Disputes is the final authority in resolving any unresolved disputes between the Borrower and the Creditor.
12. These Regulations are issued in Arabic and English. In the event of a conflict between the two versions of these Regulations, the Arabic version prevails.

The following terms and phrases, where used in these Rules, shall have the corresponding meanings unless the context requires otherwise:

Central Bank: The Saudi Central Bank.

Rules: Rules Governing the Calculation of the Annual Percentage Rate (APR).

Finance Providers: Banks, and Finance Companies Licensed to engage in retail lending.

Borrower: a person receiving finance.

Financing Agreement: an agreement whereby financing is granted for the activities listed in the Laws and Regulations.

Amount of Finance: the ceiling or the total amounts made available to the borrower under a finance agreement.

Annual Percentage Rate (APR): The discount rate at which the present value of payments and installments that are due from the borrower representing the total amount payable by the borrower equals the present value of all payments of the amount of financing available to the borrower on the date on which the financing amount or the first payment thereof is available to the borrower.

Total Amount Payable by the Borrower: the sum of principal loan amount and the total cost of finance.

Total Cost of Finance: All the costs to be paid by the borrower under a financing agreement other than the amount of Finance, including term cost, fees, commissions, administrative services fees, insurance, and any charges required to obtain finance excluding any expenses the borrower can avoid such as costs or fees payable by the borrower due to his breach of any of his obligations contained in the financing agreement.

Finance providers shall utilize the Excel based calculator issued by SAMA for the purpose of implementing the Rules.

1.  Finance providers shall update the relevant policies and procedures to comply with the requirements included in the Rules.
2. Finance providers are responsible for implementing adequate internal controls and audit mechanisms to safeguard the integrity of the APR Calculator deployed. In case where the APR Calculator is automated, finance providers should verify the results obtained using the automated tool by comparing those results to the figures obtained by using Excel based APR Calculator provided by SAMA.
3. Finance providers shall also ensure that the APR Calculator made available to customers through their websites is updated to align with the Rules requirements and the enclosed Calculator.

The APR should be calculated based on the net present value method using the following formula:

Where:

The total cost of finance shall not include:

Finance providers must consider the following while calculating the APR:

1. The periods between the date on which the amount of finance or the first payment is available to the borrower and the date of each payment received or payable by the borrower shall be calculated on the basis of 365 days a year.
2. The APR shall be calculated on the assumption that the amount of finance is valid for the term agreed upon and the parties’ adherence to their obligations according to the conditions stipulated in the financing agreement.
3. The APR must be calculated and expressed in percentage points with a minimum of two basis points, rounding half basis points to the nearest full basis points.
4. In case the finance agreement contains a clause allowing variations in term cost and fees contained in the APR (e.g. floating) which is not quantifiable at the time of financing, the APR must be calculated on the assumption that the term cost and other charges remain fixed in relation to the initial term cost applied and will remain applicable until the end of the financing agreement.

Finance providers while calculating the APR for credit cards shall assume the following:

1. The amount of finance is provided for a period of 1 year starting from the date of the initial drawdown or card allotment/approval date, and that the final payment made by the borrower clears the principal payment, term cost and other charges, if any.
2. The principal payments and term cost are repaid by the borrower in 12 equal monthly payments, commencing 1 month after the date of the initial drawdown.
3. If the ceiling of the credit card has not been determined, that ceiling shall assumed to be SAR 10,000 when calculating the advertised APR.
4. At the pre-contractual stage, the amount of finance shall be equal to the financing limit or credit card limit requested by the customer or offered to the customer.
5. At the contractual stage, the amount of finance shall be equal to the financing limit or credit card limit based on the agreement concluded with the borrower.

The internal audit function shall review the APR calculation process at least annually. Any control deficiencies highlighted by the internal auditor shall be addressed by management in a timely and effective manner.

These Rules shall enter into force (90) days after the date of their publication on SAMA’s official Website.

⁽¹⁾ Material changes or modifications may include, for example, significant changes to key terms related to payout, rights and obligations of the counterparties/customers, the changes in nature of assets underlying the product or service, changes result in new or additional risk exposure to the bank or the customer.

⁽²⁾ The management function responsible for overseeing the operations of Foreign Bank Branch (FBB) are to ensure that policies an d procedures for new products and services are consistent with the requirement of this regulation, and effectively implemented in its operations.

⁽³⁾ Chief Risk Officer (CRO) and Chief Compliance Officer (CCO), in coordination with the product or service developer, are responsible for determining whether the change to any product or service is considered to be a material change.

A Card Issuer is not permitted to increase a Credit limit of its Cardholder without receiving an Authenticated Communication from the Primary Cardholder seeking such an increase and according to the Regulations and circulars issued by Saudi Central Bank relating to Credit and Charge Cards. Any confirmation of such prior request by the Primary Cardholder must be documented. This Article does not apply to Charge Cards.

When setting initial credit limits, a Card Issuer needs to consider:

A Card Issuer may not issue or permanently increase the Credit limit of an existing Credit or Charge Card without seeking the  Cardholder’s Credit records from a Licensed Credit Information Bureau, and examining the credit record of the Cardholder to confirm the Cardholder’s solvency, repayment capacity and credit conduct.
   

A Card Issuer is required to carry out proper risk management procedures including the use of Credit scoring models, delinquency behaviour etc., for issuance and for renewal of Credit or Charge Cards and to assign appropriate Credit limits to the Cardholder.

The Card Issuer risk management procedures, together with their Credit scoring model, must be reviewed annually at a minimum or as directed by Saudi Central Bank. A fundamental part of this annual review must be the assessment of Cardholder account behavior delinquency.

Where a Cardholder has not made the full minimum monthly repayment on 3 consecutive occasions the Card Issuer will immediately:

 A Card Issuer is not allowed to lower the minimum monthly  repayment required from its Cardholder below 5% of the outstanding balance on the Credit card account.

Upon receipt of a request from a Cardholder seeking closure of the Credit or Charge Card account and upon receipt of full and final repayment of the Credit or Charge Card account, the Card Issuer is required to issue a no liability or clearance letter no more than one month from the date of full and final repayment of the outstanding amount and update the Cardholder’s record with any Licensed Credit Bureau within maximum of one week of closing the account.

A Card Issuer that advertises a Credit or Charge Card in an Advertisement must disclose, in a manner that is clear to the Cardholder, the name and Annual Percentage Rate (APR) of the advertised product and shall not include other rates such as the Term Cost.

A Card Issuer launching a campaign, advertising special term cost free promotions for a specific period, must ensure that the Advertisement discloses in a manner equally as prominent, whether or not term cost accrues during the specific period and is payable after the end of the period, with the end date of the special term cost free promotion period clearly displayed on the Advertisement.

The Card Issuer must indicate in all product Advertisements its name, logo, any identifying representation and contact details.

SAMA may require any Card Issuer who does not abide by the provisions of the articles within these Regulations to withdraw the Advertisement within one Business Day of notice from Saudi Central Bank.

If a Card Issuer offers an introductory promotional term cost, the Card Issuer must remind the Cardholder one week before the end date of the introductory promotional term cost. The Card Issuer will provide the Cardholder with the revised term cost and any change in other terms and conditions that will apply to the period after the introductory period. The Cardholder may have the option to terminate the account. In 10 days if he/she does not accept the new term cost.

Card Issuers must have a comprehensive dispute resolution policy and procedures (also known as complaint handling policy and procedures) and comply with Saudi Central Bank Regulations for complaint handling departments A copy of the Card Issuer's complaint handling policy and procedures must clearly be on display in all of their branches and on their websites and they must provide a hard copy to a Cardholder if requested.

The Card Issuer must mail or deliver a response to the Cardholder within 30 Calendar Days of receiving the notice of account statement error/dispute advising the Cardholder of the likely timeframe of resolution of the error/dispute and requesting any additional available information or documentation.

The Credit or Charge Card Issuer shall conduct necessary investigation and comply with the appropriate dispute resolution procedures (as advised to Cardholder) within two complete account statement cycles, but in no case shall be later than 90 Calendar Days as of the date of receiving the notice of “account statement error/disputed transaction. However, on an exceptional basis the Card Issuer is allowed to extend the resolution date up to 180 Calendar Days from the date of receiving notice of “account statement error/disputed transaction” if the Card Issuer confirms and can prove that the account statement error/disputed transaction falls under the purview of and is being pursued in accordance with the rules and Regulations of the relevant 'Card Association' for the Card.

If the account statement error/disputed transaction has not been Satisfactorily Resolved, the Cardholder shall not be obliged to pay the portion of the required payment that the Cardholder believes is related to the disputed amount, including term Cost or fees. The Card Issuer may not try to collect any amount, term cost or fees related to the account statement error/disputed transaction until the dispute is resolved, in accordance with the rules and regulations.

The Card Issuer shall not make an improper report about the Cardholder’s Credit standing, or report that an amount or account is delinquent prior to the error/disputed being Satisfactorily Resolved. The Cardholder is not required to pay the disputed amount or term cost or fees during the error/disputed resolution process in any event, not earlier than 90 calendar days (180 days for exceptions cases) from the date of the notice of account statement error/disputed.

If the Credit or Charge Card Issuer determines that an account statement error has occurred as stated by the Cardholder, it shall correct the error and pay back any disputed amount and relevant Term Cost and fees debited on the Cardholder’s account and deliver a correction notice to the Cardholder.

If the Credit or Charge Card Issuer determines that a different account statement error other than the one identified in the Cardholder’s notice has occurred, the Card Issuer shall mail or deliver to the Cardholder the card issuer’s reasons for believing  that a different account statement error has occurred and the reasons for the belief that the error alleged by the Cardholder is incorrect. The issuer shall correct the error and credit the Cardholder’s account with the correct amount and relevant term cost and fees in accordance with procedures in force.

If the Card Issuer determines that no account statement error has occurred, it shall mail or deliver an explanation of the reasons of believing that the error alleged by the Cardholder is incorrect and provide the Cardholder with copies of any documented evidence.

If the Credit or Charge Card Issuer deems that a Cardholder is liable for all or part of the disputed amount and relevant term cost and fees, it must:

The following terms- wherever mentioned in these rules- shall have the meanings indicated next to them, unless the context requires otherwise:

1. These rules aim to provide a general framework for savings products offered by banks, which contributes to encourage them to launch savings products and stimulate customer benefits from them.
2. These rules apply to all banks when presenting and offering savings products to their customers.
3. These rules do not override the provisions stated in the relevant regulations, instructions, and instructions issued by SAMA.

The bank must give importance to savings products in promotional advertisements. Additionally, it should allocate a section on its website and mobile application to display these products, including at a minimum the characteristics of each product, the terms of use, and frequently asked questions about the product. The section should be regularly reviewed to ensure the information remains up-to-date.

When offering and managing savings products, the bank must adhere to the following:

1. These rules represent the minimum requirements that banks must adhere to when designing, developing, offering, and managing savings products.
2. These rules will be effective from the date of their issuance.

A prepaid payment service, as regulated under these rules, is defined by the holding of monetary value in a prepaid account/electronic record that can be utilised to purchase goods or services from one or more businesses who agree to participate in the prepaid program. The defining features are:

• Monetary value is held on account for use to purchase goods and services for variable amounts as determined and agreed between the payer and payee at the time of purchase of the prepaid service
• Settlement of transactions can be between otherwise unrelated business entities.

Note: for the purposes of this document the terms "account", "electronic record" and "sub-record" are used interchangeably.

"Open loop" payment services enable the purchase of goods and services from a group of unrelated businesses through a prepaid account utilising a payment brand accepted at the participating merchants, i.e. multiple contracting entities, multiple issuers and multiple acquirers. "Open loop" prepaid services require a clearing and settlement services between different businesses. This includes the ability to encash any part of the prepaid balance through a third party network, such as ATM networks.

“Restricted loop” is a subset of an open loop program, in that the merchant acceptance of the program is limited to a specified merchant or a specified network of merchants. Examples of a restricted loop program include in its broadest form, prepaid accounts for the purchase of specific services or goods across a network of merchants (e.g., a prepaid coffee card accepted across a range of unrelated coffee shops, or a mall card accepted only at merchant locations within a specific mall);

"Closed loop" is the purchase of prepaid goods and services related to the goods and services within a defined contracting entity i.e. single contracting entity, single issuer & single/multiple acquirers. In its most restrictive form, close loop programs prepaid accounts for the purchase of services or goods from a specific merchant or merchant chain utilizing the settlement and clearing functions of the prepaid payment service. (e.g., a nationwide retailer offers a prepaid card valid only at its nationwide locations, an independent merchant offers a prepaid card valid only at its single store location but chooses to utilize the prepaid payment service for settlement and clearing functions).

Examples of closed loop prepaid goods and services include:

1. Prepaid accounts for the purchase of specific services or goods, such as prepaid fares for public transport or prepaid airtime for mobile telephony services;
2. Vouchers (a paper certificate or a series of electronic digits with a non-reloadable amount associated that allows the holder to make payments up to that value at a specific merchant or merchant chain);
3.  Gift cards for use at a merchant or merchant chain

A prepaid payment instrument is an access device, or token of identity, that can access a pre-funded account balance held by the issuer (refer to 1.2.1 Issuing Program Manager) to which a transaction can be charged. Such an access device could be a payment card, an internet wallet or a payment device utilising mobile technology.

Prepaid instruments encompassed in this regulatory framework include any access device that can provide transactional services against a prepaid balance, including but not limited to:

1. Smart/EMV cards (payment cards with an embedded micro-processor);
2. Magnetic stripe cards (payment cards with a magnetic stripe);
3. Internet wallets (stored value internet accounts)
4. Mobile payments
5. Contactless payments (Near Field Communications technology)

The implementation of a prepaid payment service payments system in the Kingdom of Saudi Arabia will impact a range of stakeholders, including for example: SPAN, prepaid payment service issuers, acquirers, merchants, accountholders and primary cardholders.

The general rules for Know Your Customer (KYC) are set out in "Rules Governing Anti-Money Laundering (AML) & Combating Terrorist Financing (CTF)", Issued by Saudi Central Bank, Section 4.3. For prepaid products the entity responsible for KYC purposes is the regulated entity permitted to issue prepaid products.

Depending on the classification of the prepaid payment service proffered, KYC obligations for prepaid payment accounts or electronic records will require either a full verification of the primary cardholder or non-verification.

Specifically,

• KYC requirements for open loop prepaid services will require full verification
• Closed loop cards will not require verification for the primary cardholder within certain constraints.

For prepaid accounts issued in the Kingdom, the opening of accounts must be in compliance with the current version of “Rules Governing the Opening of Bank Accounts & General Operational Guidelines in Saudi Arabia” issued by SAMA or with the rules defined in sections 2.4.1, 2.4.2, 2.4.3, 2.4.4 .

For closed loop prepaid payment products not requiring KYC the account opening rules are defined in section 2.4.5.

The general rules for Anti-Money Laundering (AML) are set out in the Saudi Arabian "Anti Money Laundering (“AML”) law" and "Rules Governing Anti-Money Laundering & Combating Terrorist Financing", Section 4.2. Any prepaid product must comply with all anti-money laundering/combating financing of terrorism guidelines already implemented in the Kingdom of Saudi Arabia.

Banks must ensure that card and account holder's confidentiality is maintained at all times and comply with the requirements of:

a) "Rules Governing Anti-Money Laundering & Combating Terrorist Financing", Section 4.10: "Record Keeping & Retention" and

b) "Rules Governing the Opening of Bank Accounts & General Operational Guidelines in Saudi Arabia", Part 2 "Supervisory Rules & Controls" Section 4: "Updating Account Data".

In addition to the requirements described as follows:

2.6.1 Contracting entity (an individual or a juristic person or government entity) data collection

The issuer is responsible for ensuring that the primary cardholder’s data is collected and processed, irrespective of other parties being involved in providing the service (refer to 1.2.1).

2.6.2 Contracting entity (an individual or a juristic person or government entity) data storage

The issuer shall ensure that contracting entity (an individual or an organisation) personal data, either in electronic format or paper-based, collected during the contracting entity’s recruitment, as well as from the transactional activity of the payment device is stored in secured facilities within the Kingdom of Saudi Arabia (see "Rules on Outsourcing" issued by SAMA).

The data storage facilities and the data transmission processes are considered secured if the issuer has taken the necessary technical and organisational measures to comply with the Payment Card Industry (PCI) standards as defined, to protect the data against:

a) Accidental loss;

b) Alteration, unauthorised disclosure or access;

c) All other forms of unlawful processing.

2.6.3  Third party use of contracting entity (an individual or a juristic person or government entity) and/or primary cardholder data

Prior consent of the primary cardholder is needed when the issuer or a third party wishes to use the primary cardholder’s personal data for services additional to the purpose for which it has been collected (e.g., for e-marketing purposes), except when:

a) The issuer or the third party is required to do so in order to comply with a legal obligation (e.g., responsibility to comply with regulations relating to money laundering); or

b) The data is non-attributable and its use is defined in the contract to which the primary cardholder is party (note: primary cardholders can provide such consent as part of the application process).

Advertising for prepaid payment service products must follow SAMA regulations for advertising Financial Service Products, including the SAMA circular dated 28^th Safar 1430H- 8th November 2009, which prohibits banks using names and/or pictures of holy places for any marketing activity. In accordance with the Banking Control Law, issued by Royal Decree, No. M/5Dated 22.2.1386 H, article 23 (5).

For prepaid payment service products requiring full KYC verification, (see section 2.3.1), statement preparation and delivery (either physical delivery by post or notification of electronic statement availability or through branches) must occur, at a minimum, quarterly if requested by the account holder.

The statement must include all transactions credited or debited from the account. The statement shall disclose the following items:

a. Charges/Fees. A disclosure of the amount, itemised and identified by type, of any charges or fees debited to the account during the statement cycle;

b. Address or phone number for notice of statement errors. The address or the phone number to be used for notice of statement errors.

In addition, the issuer shall, upon receipt of an enquiry from the cardholder, provide information about the remaining balance on the payment device, in any appropriate form.

For prepaid payment service products that use a simpler form of KYC, (see section 2.3.2), there are no requirements to issue regular statements. Prepaid payment service customers will be entitled to enquire about the remaining balance on the payment device upon presentment of the payment device at PoS at a participating merchant outlet.

The prepaid dispute resolution process is as defined in the SPAN Scheme Standard. For avoidance of doubt these are as follows.

2.12.1 Merchant Dispute Resolution

This section provides the rules for the disclosure of information between the prepayment operator, "Operator", (issuer and/or acquirer) of a prepaid payment service transaction and the merchant where the agreement relates to a closed loop prepaid product.

If SAMA finds that a bank has failed to comply with the rules contained in this document , it may take one or more of the following measures:

• impose fines on prepaid service providers;
• impose, for any specified period, limitations or other restrictions in relation to carrying out prepaid payment service provision by an issuer or acquirer;
• require a prepaid service provider to provide restitution to their customers; and
• request removal of outsourced service providers.

In applying penalties for non-compliance SAMA will be guided by the level of penalties identified in Article 23 of the 'Banking Control Law', No. M/5 Dated 22.2.1386.

For prepaid accounts issued within the Kingdom, the closing of accounts must be conducted in accordance with the prevailing legislation.

2.15.1 Account Closure Rules for Reloadable Accounts

If a prepaid payment service account is reloadable, the following closure rules apply:

2.15.2 Disclosure:

The Issuing Programme Manager must provide the accountholder/contracting entity with appropriate methods or options to close their prepaid payment service record (account). Such options must be disclosed to the accountholder at the time of account opening.

2.15.3 Accountholder initiated closure:

The accountholder is permitted to request closure of the prepaid payment service record by advising the issuer directly at an issuers premises or branch (including mobile branches), by authenticated contact through a call centre access, or through written request for record closure to a customer service centre. The issuer must offer the accountholder a mechanism by which they can choose to either transfer any remaining balance to another account/record or withdraw the remaining balance in cash.

The prepaid card(s) associated with the record should be returned to the issuer upon record closure, to be securely destroyed. In the event the prepaid card cannot be provided to the bank during the record closure request, the card should be disabled from further use.

2.15.4 Issuer initiated closure:

Issuer (Bank) can initiate a record closure, at their discretion, after a record has been inactive for at least 180 days and in all cases after 5 years, in accordance with the SAMA ‘Rules Governing the Opening of Bank Accounts & General Operational Guidelines in Saudi Arabia’. If a positive balance remains on the record, the bank must inform the accountholder in cases where the account holder is known, in writing or by other suitable means (e.g. SMS) of their intent to close the record and give the accountholder 30 days prior notice from the date of dispatch of the intent to close.

If after this 30 day period the record remains inactive, the bank must close the prepaid record and disable the associated prepaid card(s). Any remaining balance in the record must be transferred to the Unclaimed Balances Account. Funds will remain at the Unclaimed Balances Account to support any refund in the event the accountholder or his representative was to return in the future and request their remaining funds.

2.15.5 Account Closure Rules for Non- Reloadable Accounts

If a prepaid payment service account is non- reloadable (e.g. Gift Card), the account record expires either:

• When the value on the account record has been exhausted/spent.
• When the expiry date of the card is reached.

2.15.6 Cardholder Balance Refund on Non-Reloadable Accounts

If a cardholder requests redemption of the outstanding balance on a dormant or expired card, the merchant is obliged to honor the cardholder request, upon presentation of relevant ‘proof of ownership’.

Such proof shall include:

           -   Presentation of the relevant Gift Card

           -   A receipt that may have been issued by the Merchant or Card Issuer at the point of buying such card or alike.

Upon presentation of such proof, the cardholder shall be entitled to reimbursement of the ‘net outstanding balance’⁽⁶⁾ on the account. Such reimbursement may be by way of:

            -    A re-issued gift card for (at least) the net outstanding balance

            -    Bankers cheque

            -    Cash

⁽⁶⁾ The net outstanding balance shall be deemed to be the value outstanding on the card following the last recorded purchase transaction, less any legitimate issuer fees (see 2.8.9) that may be applicable up to the time of the ‘redemption’ request.

These instructions aim to establish the minimum provisions that finance providers must adhere to when offering real estate financing products to individuals, in order to help clients make informed decisions when requesting real estate financing, protect the rights of all parties, and enhance the soundness of the real estate financing sector.

These instructions apply to banks and real estate finance companies subject to the supervision of SAMA.

Acknowledgment of Acceptance of Credit Risks for Real Estate Financing with Variable Term Costs
 

The terms and phrases listed below, whenever used in these instructions, shall have the meanings specified next to each of them, unless the context requires otherwise:

SAMA : Saudi Central Bank.

Instructions: Instructions for Handling Promissory Notes.

Financing Entity: Banks, and financing companies are subject to supervision and regulation of SAMA.

Customer: An individual or legal entity receiving a financing product from a financing entity.

Default: The failure of the customer to pay the agreed-upon monthly installments in the financing contract for three consecutive months, or for more than five separate months throughout the financing period, or as stipulated in the financing contract for non-monthly payments.

Third Party: An entity contracted to perform services on behalf of the financing entity that were previously carried out by the financing entity or to provide a new service intended for implementation. This may be a unit within the financing entity, an affiliated company, or an independent company.

Documented Communication: A recorded means of communication that can be verified and retrieved in written or electronic form.

2.1. These instructions aim to establish the minimum requirements that financing entities must adhere to when handling promissory notes.

2.2. These instructions do not override the provisions set forth in related instructions, including but not limited to the following:

- Debt Collection Regulations and Procedures for Individual Customers issued under SAMA Circular No. (39100008334) dated 26/07/1439 H.

- Model Contract of the Financial Lease of Vehicles for Individuals issued under SAMA Circular No. (41038534) dated 01/06/1441 H.

- Mortgage Finance Model Contract for Individuals in Murabaha and Ejarah issued under SAMA Circular No. (41038504) dated 01/06/1441 H.

-Rules on Outsourcing for Finance Companies issued under SAMA Circular No. (65338/99) dated 07/05/1440 H.

- First Update to the Instructions for Rules on Outsourcing issued under SAMA Circular No. (41027017) dated 18/04/1441 H.

- Controls on the Customer Signatures on the Bonds of the Order Without Data (Blank) in Exchange for Access to Banking Facilities  issued under SAMA Circular No. (271000000743) dated 19/12/1427 H.

- SAMA Circular No. (41044391) dated 25/06/1441 H concerning the "Nafith" Electronic Platform Approved by the Ministry of Justice.

- SAMA Circular No. (41045412) dated 01/07/1441 H concerning the "Nafith" Electronic Platform Approved by the Ministry of Justice.

Any Motor Vehicle governed by financially leasing contract to individuals shall be insured according to the provisions of these Rules. No amendments shall be allowed to the insurance coverage to go beyond the minimum limits set by these Rules, such as amendments to the coverage, conditions, provisions, or exclusions.

The Lessor must include the name of the Lessee in the “vehicle registration” as the “actual user” of the Motor Vehicle.

The Lessor shall insure the Motor Vehicle annually during the period of the finance leasing contract.

The Lessor shall obtain insurance offers from at least three Insurers, and chose the best offer and lower price and provide it to the Lessee.

1. The Insurance Premium shall be calculated annually by the Insurer based on the changes on the Sum Insured and the pricing factors for the Lessee. The Lessor shall provide the Insurer with the Lessee’s information in the Insurance Form which is required the pricing; after obtaining the Lessee’s approval.

2. The Lessee shall provide the Lessor with any Material Changes to his/her data, which have been previously submitted to the Insurer and which effect the insurance Premium.

3. The Insurer shall provide the Lessor with The Actual Amount of the Premium along with the Premium amount after applying the Discounts, if the Lessee is eligible for any.

4.The Lessor shall calculate the Premium amount on the Lessee at the beginning of the finance leasing contract, based on the Actual Amount of the Premium. (as the explanatory example below)

5.At the end of the insurance year, the Lessor shall calculate the balance amount of what have been paid to the Insurer, and what have been paid by the Lessee, and keep it in the Lessee Insurance Account, and provide the lessee with a copy of the Lessee Insurance Account.

6.At the end of the finance contract between the lessee and the Lessor, the Lessor shall pay back the Lessee the extra amount of Premiums paid by the Lessee or shall ask the Lessee to pay the extra amount paid by the Lessor to the Insurer for the insurance Policy.

7. The accounts settlement related to the insurance Policy shall be made within (30) days from the termination date of the agreement between the Lessor and the Lessee.

Explanatory example:

First year:

Motor Vehicle Value: 100,000 SAR.

The Actual Amount of Premium: 4,000 SAR. SAR.

The Premium amount after applying Discounts: (for example, no claim discount 30%): 2,800 SAR. The Lessor computes the Premium amount on the Lessee based on The Actual Amount of Premium (4,000) SAR and saves the different between The Actual Amount of Insurance Premium and the Premium amount after applying the Discounts: (4,000-2,800=1,200) SAR added to the Lessee Insurance Account.

Second year:

Motor Vehicle value: 80,000 SAR. (after applying depreciation percentage).

The Actual Amount of Premium: 3,200 SAR.

The Premium amount after applying Discounts: (for example, no claim discount 40%): 1,920 SAR.

The different between The Actual Amount of Premium and the Premium amount after applying the Discounts: (3,200-1,920=1,280) SAR added to the Lessee Insurance Account. The Lessee Insurance Account balance: (first year: 1,200+second year: 1,280=2,480) SAR.

Third year:

Motor Vehicle value: 70,000 SAR.

The Actual Amount of Premium: 2,800 SAR.

No amount will be added to the Lessee Insurance Account if he/she is not eligible for any Discounts for having an accident.

At the end of the finance lease contract, the amount withdrew from the Lessee and the amount paid to the Insurer are subjected to liquidation, as follow:

Amount withdrew from the Lessee: 4,000+3,200+2,800=10,000 SAR. Amount paid to the Insurer: 2,800+1,900+2,800=7,520 SAR.

7,520-10,000=2,480 SAR to be paid back to the Lessee.

The Lessor and the Lessee shall agree at the beginning of the finance leasing contract on the annual depreciation percentage, which shall be stated in the Insurance Form

Only the Lessee shall have the right to request Additional Benefits to the Policy and determine the Deductible amount.

The Lessor and the Lessee shall agree on the method of repairs to take place (dealerships or certified auto repair shops) in The Insurance Form.

1-The Lessor shall explain to the Lessee the scope of insurance coverage as well as the conditions, provisions and exclusions applicable to the Policy.

2-The Lessor shall provide the Lessee with a hard or electronic copy of the Policy at the beginning of the finance leasing contract and at every renewal of the Policy.

Sum Insured Calculation:

The Sum Insured is determined in the first year following registration of the Motor Vehicle at the authorized authority based on the retail price offered by the certified dealership for the insured Motor Vehicle (excluding finance amounts or any other future services), provided that the value will be subject to the annually depreciation percentage, as specified in the Insurance Form as to reflect its real value at the time of renewal.

The Policy shall be treated as individual insurance policies regarding -for example but not limited to- pricing, eligible Discounts and Claims settlement.

The insurance coverage request that was completed and signed by the insurance applicant or their legal representative shall form an integral part of the Policy; which contains the provisions, conditions, exclusions, coverage limits and schedule; and any Endorsement agreed upon, whether at the start of the insurance coverage or following its effectiveness.

Insurance Coverage

Coverage under the Policy shall include loss or damage to the insured Motor Vehicle, and third party civil liability.

1. Scope of Coverage:

The Insurer shall compensate the beneficiary for loss or damage to the Motor Vehicle, including any installed accessories, occurring due to any incident, including fire, theft or damage resulting from lightening or natural disasters such as floods or hailstones, according to the Policy conditions provided below.

2.Maximum Indemnity Limit:

a. Partial Loss: The maximum indemnity limit in case of Partial Loss or Damage is the cost of reinstatement of the Motor Vehicle, in addition to the costs of transportation and storage, after calculating the Deductible amount and the depreciation rate if applicable according to the conditions stated in the Policy, and this amount shall be determined by entities licensed to conduct vehicle damage assessments.

b. Total Loss: The Insurer’s maximum liability limit in case of Total Loss shall not exceed the Sum Insured for the Motor Vehicle. The Motor Vehicle is deemed as Total Loss or damaged if the damage assessment shows that the needed repairs are economically or technically infeasible, provided that such assessment is conducted by entities licensed to conduct vehicle damage assessments.

3. Deductible:

a- In the event of Partial Loss or Damage to the Motor Vehicle the Insurer may charge the Deductible amount specified in the Policy Schedule for each Claim.

b- The Insurer’s liability starts after the Deductible has been exhausted, and this is only applicable to damages or losses occurring to the insured Motor Vehicle, and it does not apply on claims arising from civil liability coverage against third party.

c- The First Beneficiary shall not be charged a Deductible if the Lessee or the Driver were not held liable for the Accident, according to the report prepared by the entity attending the Accident scene.

d- In case the First Beneficiary or the Driver is held partially liable for the Accident, the percentage of Deductible amount shall be calculated as per the percentage of liability accounted for by the Lessee or the Driver regarding the Accident only.

e- Under no circumstance shall the Deductible be multiplied within this Policy for a single motor Accident.

4. Storage and Transportation:

The Insurer shall pay the expenses incurred by the Insureds when transporting the damaged Motor Vehicle, due to an Accident covered under the Policy, to a safe location, auto repair shop, certified dealership, or to an assessment center in the case the vehicle was immobile. Such expenses will be limited to a maximum of SAR (500) within the city and SAR (1,000) outside the city; provided that the transportation receipt is submitted when filing the Claim.

6. Claim Settlement Procedures:

a- Either the First or the Second Beneficiary may file a Claim request to the Insurer upon the occurrence of loss or damage covered under the Policy. The Insurer shall provide the Claimant, within (3) business days, with a notice acknowledging receipt of the Claim and informing them of any missing documents. The Insurer may also appoint an assessor or loss adjuster, if necessary, within a period not exceeding (3) business days from receiving the Claim completed with all documents, provided that the Insurer informs the Claimant of whether the Claim is accepted or rejected, within (10) business days from the date of filing the Claim completed with all documents.

b- If the Claim is accepted and deemed to be Partial Loss, the Insurer shall approve repairing the insured Motor Vehicle at the respective certified dealership or the certified auto repair shops approved by the Insurer (as specified in the Policy Schedule) within (5) business days, ensuring that the First Beneficiary receives the Motor Vehicle after it has been reinstated to its former condition before the loss or damage. The Insurer shall also provide details regarding the due indemnity process and what does it cover (the amount of spare parts and labor charges).

c- If the insured Motor Vehicle is deemed to be Total Loss, the Insureds shall compensate the Second Beneficiary with the Sum Insured specified in the Policy Schedule - after calculating the Deductible, if any - and inform the First Beneficiary of the amount indemnified to the Second Beneficiary via a reliable communication means. The Insurer shall settle the Claim sustained under this Policy with integrity and fairness, without any compromises, and within a maximum period of (10) business days from the date of the Claim completed with all documents. The Second Beneficiary shall deliver the Motor Vehicle wreckage to the Insurer.

d-In the event of damage or loss of the Motor Vehicle caused by a third party, The Insurer shall compensate beneficiaries in

accordance to these Rules. The Insurer has the right of recovery against the Insurer of the third party whom caused the accident.

e- The Insurer shall prioritize the First Beneficiary in purchasing the insured Motor Vehicle wreckage when its loss or damage is deemed as economically Total Loss, according to the value determined by the authorized entity in assessing the Motor Vehicle after the occurrence of the damage.

f- In case of Motor Vehicle theft, the Insureds or any of them shall report to the competent authorities and the Insurer promptly, and the Claim shall only be accepted after a period of (60) days from the date of submission of such report.

g- If an Insurer does not issue the necessary approval for repairing the Motor Vehicle or settling the Claim within the prescribed period without a legal justification, both beneficiaries - after filing a complaint to the Insurer- are entitled to submit a complaint against the Insurer via SAMACares website (www.Samacares.com) or with the Committees for Resolution of Insurance Disputes and Violations, so as to compel the Insurer to settle the Claim and compensate such beneficiaries for any costs incurred as a result of their inability to use the Motor Vehicle due to the Insurer's delay in settling the Claim.

h- In case of rejection of the Claim, the Insurer shall:

1.Provide the Claimant with the reasons for rejection.

2.Inform the Claimant of their right to submit a complaint at SAMACares website (www.Samacares.com) or refer their case to the Committees for Resolution of Insurance Disputes and Violations for consideration.

3. Provide the Claimant with a copy of documents related to the Claim upon their request.

This coverage excludes:

1- A Motor Vehicle found to be driven by a person who does not hold a valid license corresponding to the type of vehicle driven, according to the relevant laws and regulations, or in the event that an order is issued by a concerned authority for the forfeiture of the Driver’s license, or if the license was expired at the time of the Accident unless it was renewed within (50) business days from the date of the Accident.

2-The Deductible amount stated in the Policy Schedule.

3-Consequential loss or denial of usage.

4-Manufacturing defects and damages resulting due to the usage of the Motor Vehicle or from mechanical or electrical malfunctions.

5-Damage, loss or theft of tires, rims, and/or hubcaps (wheel covers), unless such loss or damage occurred thereto at the time of the covered Accident.

6-Death or physical injury to the Insured or the Driver.

7-Emergency medical expenses.

8-Loss or damage to goods and/or personal belongings while being loaded, unloaded or transported in or on the Motor Vehicle.

9-Loss or damage to any trailer unless expressly stated otherwise in the Policy Schedule.

10-Loss or damage to a Motor Vehicle as a result of theft or attempt theft due to leaving the Motor Vehicle running or abandoning the keys inside of it, or due to not shutting down the windows or closing the doors.

11-All additional Motor Vehicle’s accessories, apart from those already fitted by the manufacturer and whose price is already included in the original price of the Motor Vehicle, unless the type and value of such accessories are explicitly and specifically stated in the Policy Schedule.

12-If the Motor Vehicle is used in contravention to restrictions set forth in the Policy Schedule.

13-Carrying passengers beyond the permitted loading capacity of the Motor Vehicle or overloaded; if it is proven that the Accident was caused by such violation.

14-If the Motor Vehicle is used for any type of racing or for acceleration, endurance or speed testing.

15-A Motor Vehicle driven by a person under the influence of drugs, alcohol, or medicines which medically prohibit driving after taking it.

16-If the Motor Vehicle is being used or operated as working machinery.

17-Car drifting, running a red light or driving against direction of traffic if it is proven that this was the cause of the Accident according to the report prepared by the authorized entity of traffic Accidents.

18-A Motor Vehicle driven in areas that are normally off-limits to the public, such as airports or seaports.

19-Any liabilities or costs that were directly or indirectly incurred due to criminal and hostile acts committed by the Insureds and/or the Driver.

20-If the Driver escapes the scene of the Accident for no acceptable justification.

21-If it is proven in the report prepared by the authorized entity attending traffic Accidents that the Accident was caused deliberately by the Insured or the Driver.

22-Submitting inaccurate information or concealing material facts in the insurance coverage request.

23-Accidents occurring outside the territorial borders of the Kingdom of Saudi Arabian.

24-Any liability or expenses arising, directly or indirectly, from the following:

a) War, invasion, acts of foreign enemy, hostilities, warlike acts (whether war is declared or not), or civil war.

b) Rebellion, military or popular uprising, insurgence, revolution, usurping authority, martial laws, siege; or any events or reasons leading to declaring or continuation of martial laws, siege, or acts of vandalism and terrorism committed by person(s) working individually or on behalf of or related to any terrorist organization. Terrorism shall mean the use of violence for political, intellectual, philosophical, racial, ethnic, social, or religious purposes. The use of violence includes putting the public and/or a segment of it under panic condition; affecting and/or causing turmoil; intervening in any operations and/or activities or policies related to the government; or causing turbulence negatively affecting the national economy or any of its sectors.

c- Strikes, riots, or civil or labor unrest. 

d-What has been caused, or contributed to, by nuclear weapons, ionizing radiations, radioactive contamination due to any nuclear fuel or waste, or contamination due to nuclear fuel combustion. For the purposes of this exclusion, combustion shall include any nuclear fission.

The Lessee may opt to cancel any of the exclusions above, which will be included as an Additional Benefits, unless deemed to be in conflict with relevant laws.

Covering Third Party Civil Liability

The determination of coverage in this section is subject to the Unified Compulsory Motor Insurance Policy issued by Saudi Central Bank.

               General conditions

1. Subrogation:

Following indemnification of an insurance beneficiary, the Insurer has the right to act on behalf of the Insured in pursuing their Claim against the person at fault, unless it is the First Beneficiary.

2. Right of Recovery:

In the case that an Insurer made indemnity payments to any party whomsoever for damage or loss, and it was later discovered that the payments were made upon a risk excluded from or not covered under the Policy; or if the Claim involved deceit, fraud, misinformation or forgery, the Insurer is entitled to recover against the indemnified person for the indemnity payments. The Insurer is also entitled to recourse against any person at fault in case of attempted theft or theft of the insured Motor Vehicle or when the insured Motor Vehicle is driven by any person without permission from the Insureds.

3. Changes:

The Insureds shall notify the Insurer, within 20 business days of any Material Changes to the information submitted in the insurance coverage request. The Insurer shall notify the Insureds in case it intends to increase the amount of the Premium, or reimburse part of the Premium to the lessor when it is reduced. If no notification is sent to the Insured by the Insurer within five business days, then this shall indicate the Insurer’s agreement to continue providing the coverage at the Premium rate agreed upon at the time of signing the Policy.

5. Obligations of the Insureds or Driver in Case the Occurrence of an Accident Covered under the Policy:

a) Shall inform the concerned entities as soon as an Accident occurs and shall not leave the scene of the Accident until procedures have been completed, except in cases where leaving the scene is required such as the case of physical injuries.

b) Shall not Claim responsibility with the intention of harming the Insurer, pay or undertake to pay any amount to any party involved in the Accident except after obtaining a prior written approval from the Insurer.

c) Shall cooperate with the Insurer, and issue powers of attorney enabling the Insurer to carry out the pleading, defending and settlement procedures on behalf of the Insured or the Driver, if the Insurer expresses its desire to do so.

d) Shall, at the Insurer's expense, perform all actions required to guarantee the Insurer's right for recovering any of its due entitlements from any other party, as a result of indemnity paid in accordance with the Policy.

e) Shall inform the concerned entities in case of theft or any other criminal act and shall cooperate with the Insurer in securing the conviction of the offender.

6. Fraud:

All rights arising from the Policy shall be forfeited if the Claim involves fraud, or if the Insureds or the Driver adopts fraudulent ways or methods to gain benefit under this Policy, or if the liability or damage resulted from a deliberate act by or collusion with, the Insureds, the Driver, or others. The Insurer has the right of recover against any party found to be responsible for such fraud, whether as a conspirator or an accomplice.

7. Cancellation:

Neither the Insurer nor the Insureds has the right to cancel the Policy after its issuance, except in the following cases:

a. The write-off of the Motor Vehicle’s registrar.

b. Transfer of ownership of a Motor Vehicle to another owner.

c. The existence of alternative Policy that provides the same coverage indicated in the Rules and covers the remaining term of the Policy to be cancelled.

d. Termination or cancelation of the finance leasing contract between the Lessor and the Lessee.

The Insurer shall refund the Lessor the due amount payable for the uncovered period by depositing the amount to their bank account via IBAN, and it will be added to Lessee Insurance Account, within three business days from the date on which the Insurer becomes aware of the occurrence of any of the cases mentioned above. The due amount payable to the Insureds for the uncovered period is calculated by subtracting the elapsed days from the total Policy term (in days) and then dividing the result by the total Policy term. The result is then multiplied by the insurance Premium less administrative fees (a maximum of SAR 25), and as follows:

(365 - elapsed days) /365 × insurance Premium less administrative fees (a maximum of SAR 25) = return Premium payable to the Insured.

The Insurer is exempted from paying the return Premium in the case that there is a Claim—related to the Policy to be cancelled and on the Motor Vehicle covered by the Policy—whose value exceeds the amount to be refunded as per the calculation formula mentioned above.

Notwithstanding the foregoing, Insurers, Insureds and Drivers shall remain bound by the provisions of this Policy with respect to the obligations arising prior to its cancellation.

8. Policy Issuance and Renewal Notification:

The Insurer may not issue this Policy unless it is automatically linked to the system of the authorized entity in the collection, maintenance, and sharing of insurance information. The Insurer shall notify the Insureds of the expiry date of the Policy- (45) days as maximum- in advance, in order to enable them to renew the Policy or replace it with another Policy from another insurance company.