Micro, Small and Medium Size Enterprises (MSMEs) Disclosures in the Annual Report Qualitative Disclosures
No: 391000007761 Date(g): 12/10/2017 | Date(h): 22/1/1439 Small and medium enterprises (SMEs) play a significant role in contributing a substantial portion of the GDP in many global economies. In advanced economies, SMEs contribute approximately 70% to the GDP, while their contribution in Saudi Arabia stands at around 20%. Diversifying income sources and increasing the contribution of the non-oil sector to the Kingdom's economy are among the key goals of Saudi Vision 2030.
The Central Bank, in collaboration with banks, and the General Authority for Small and Medium Enterprises, is working on a thorough review of regulations and guidelines to remove obstacles and enhance the effectiveness of SME units within banks operating in the Kingdom. Reference is made to the Central Bank’s Circular No. 381000064902 dated 16/06/1438H, which approved the new definition of SMEs, also adopted by the Board of Directors of the General Authority for SMEs, to include micro-enterprises. Additionally, performance indicators have been introduced, and prudential data for SMEs and micro-enterprises have been amended as per Circular No. 381000094106 dated 06/09/1438H.
In this context, the Central Bank has introduced a report that includes both quantitative and qualitative data on SMEs, which banks are required to include in their annual Board of Directors' reports starting in 2017G. Details can be found in Appendix (I), while Appendix (II) contains answers to frequently asked questions on this topic.
For any further questions or inquiries, you may contact the Central Bank.
Annexure I
Micro, Small and Medium Size Enterprises (MSMEs) disclosures in the annual report Qualitative disclosures
Qualitative information on:
- Currently approved definition of MSMEs
- Initiatives for MSMEs taken by the Bank
- MSME unit and staff in the unit
MSMEs training initiatives and workshops for staffs and customers should be presented in the following format
Number of *man-days training provided to staff Number of *man-days training provided to customers *Man-days means 8 hours per day.
Quantitative disclosures
The below table for MSMEs is required for both current and previous years.
Current Year All in SAR’000
Details Micro Small Medium Total Loans to MSMEs - on Balance Sheet (B/S) Loans to MSMEs - off Balance Sheet (notional amount) On B/S MSMEs Loans as a %age of total on B/S loans Off B/S MSMEs Loans as a %age of total off B/S loans Number of loans (on and off) Number of customers for loans (on and off) Number of loans guaranteed by Kafalah program (on & off) Amount of loans guaranteed by Kafalah program (on & off) Previous Year All in SAR’000
Details Micro Small Medium Total Loans to MSMEs - on Balance Sheet (B/S) Loans to MSMEs - off Balance Sheet On B/S MSMEs Loans as a %age of total on B/S loans Off B/S MSMEs Loans as a %age of total off B/S loans Number of loans (on and off) Number of customers for loans (on and off) Number of loans guaranteed by Kafalah program (on & off) Amount of loans guaranteed by Kafalah program (on & off) Annexure II
Frequently Asked Questions (FAQ)
Q1: Should the quantitative MSME loan figures include both on and off-balance sheet items?
A1: Yes, the figures should include both on and off-balance sheet items. Off balance sheet items should be reported at notional amount. The rows have been expanded in the quantitative tables to include separate information for both on balance sheet and off-balance sheet lines.
Q2: Should the bank apply the recently prescribed definition of MSME?
A2: The Banks should implement the recently prescribed definition of MSME as mentioned in the SAMA circular (381000064902) dated 16/6/1438H starting from 1 January 2018.
If readily available, banks are encouraged to use new definition to populate these tables for 2017 annual report. If the banks don't have available data, they can report using the old definition under SAMA circular (29697\BCS\14849) dated 22/April/2012G. However, in both cases, the banks should clarify this in the notes accompanying the tables.
Q3: Can banks include customer/staff training that last less than the pre-defined 8- hour Man-Day definition?
A3: Yes, banks can include those training hours in the qualitative disclosure segment.
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Without prejudice to the terms of use of SAMA website Hereby, you acknowledge that any illegal, unauthorized use and/or any breach of any of these provisions may result in legal actions against you.
Your access and use of SAMA Regulatory Rulebook and its content is considered as an acceptance and approval of commitment by you without any limitation or condition to the following:
SAMA Regulatory Rulebook is a platform that aims to assist the regulated entities to access SAMA regulatory content adeptly and efficiently.
SAMA Regulatory Rulebook is still on its development and soft launch stage. SAMA is not liable for its contents and does not warrant or represent that (the Services related to the platform, information or material presented in the platform) is displayed free of any inaccuracies, omissions, or errors (“Faults”). SAMA accepts no liability for any loss, claim or damage resulting from any use of the platform, and any decisions made, or actions taken based on the information contained in or generated by the platform.
SAMA Regulatory Rulebook has no legal effect and it does not aim to amend or revoke any legal provisions. The Rulebook still Contains some documents under review, including translated versions. Therefore, SAMA Regulatory content circulated through SAMA official channels remains in force.
Without prejudice to the terms of use of SAMA website Hereby, you acknowledge that any illegal, unauthorized use and/or any breach of any of these provisions may result in legal actions against you.