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1. Introduction

No: 44047144 Date(g): 27/12/2022 | Date(h): 4/6/1444

Effective from Jan 01 2023 - Dec 31 2022
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1.1The Basel Committee on Banking Supervision issued the Basel III: Finalizing post-crisis reforms in December 2017, which includes among others, the revised framework for Credit Risk aimed to enhance the robustness and risk sensitivity of the standardized approaches, balances simplicity of the framework and, comparability in the calculation of risk weighted assets (RWAs) for credit risk using different available approaches.
 
1.2This revised framework in risk-weighted assets for credit risk is issued by SAMA in exercise of the authority vested in SAMA under the Charter issued via Royal Decree No. M/36 dated 11/04/1442H, and the Banking Control Law issued 01/01/1386H.
 
1.3This revised framework on risk-weighted assets for credit risk will supersede the following existing requirements related to the calculation of RWAs for credit risk:
 
-Circular No. BCS 242, Date: 11 April 2007 (Mapping of Credit Assessment Ratings Provided by Eligible External Credit Assessment Institution to Determine Risk Weighted Exposures).
 
-Circular No. 351000121270, Date: 17 July 2014 (Basel III - Internal Rating Based Approaches for Credit Risk).
 
-Circular No. 391000047997, Date: 14 January 2018 (Reducing RWA for mortgages to 50%).
 
-Circular No. 410589780000, Date: 1 June 2020 (Reducing RWA for MSMEs).