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Chapter IV Quantitative Principles of Responsible Lending

No: 465380000099 Date(g): 17/5/2018 | Date(h): 3/9/1439 Status: Modified
This article is amended in accordance to SAMA circular No. (40694/1) dated 09/09/1439.
13.Terms for calculating the consumer’s monthly credit obligations must be observed as follows:
 
 a.The monthly credit obligation of a credit card must be equal to the minimum repayment of the credit ceiling for each credit card issued to the consumer.
 
 b.Monthly credit obligations include all credit obligations to creditors and specialized government lending institutions; any other credit obligations, such as loans from employers, friends, or relatives; and other types of finance.
 
 c.Before granting finance with variable term cost and upon calculating the monthly credit obligations of such finance, the creditor must take into account including additional margin in the term cost. The term cost and the additional margin must be considered when documenting the monthly credit obligations for such finance in the consumer’s credit report in the credit bureau in order to avoid risks of changes to term cost.
 
 d.Upon granting finance, the creditor must be responsible when the deductible ratio exceeds the permitted limit hereunder if it is due to a change in the term cost. If this happens, the creditor must reschedule the repayment periods of the finance and must not add a term cost that may lead to exceeding such limits.
 
 e.Monthly credit obligations of finance where all installments are not equal must be calculated based on monthly installments that are fixed at the monthly average level for all installments regardless of whether such finance is payable by equal repayments or requires a final payment.
 
14.Terms for calculating the total monthly income of the consumer must be observed as follows:
 
 a.Gross salary, as documented by any means by the employer, must be included in such calculation.
 
 b.As for other income, half of the monthly average of the total amount earned by the consumer from any periodical income, whether monthly, annual or other, must be included in such calculation. The other income must include periodically-paid allowances and compensation, rental income, revenues of investments, dividends, etc., which can be reasonably verified via, at least, a two-year bank statement or official documents proving their continuity.
 
 c.Government subsidies, such as those given through the Citizen Account Program or social security, must not be counted as part of the total monthly income of the consumer. However, government subsidies that are documented through contracts with a citizen and that are provided by the Ministry of Housing or the Real Estate Development Fund may be incorporated in the total monthly income of the consumer in real estate finance products.*
 
15.Deductible ratios for consumers whose total monthly income is SAR 15,000 and less must be subject to the following restrictions:
 
 a.The monthly credit obligations of finance, which are linked only to the monthly deduction of the gross salary of consumer, must not exceed 33.33% of the gross salary for employees and 25% for retired consumers.
 
 b.Monthly credit obligations, excluding monthly credit obligations for real estate finance, must not exceed 45% of the total monthly income of the consumer.
 
 c.Monthly credit obligations of finance must not exceed 55% of the total monthly income of the consumer However, for the consumers who are benefiting from the Ministry of Housing or the Real Estate Development Fund for mortgage products, the monthly obligations of finance must not exceed 65% of the total monthly income.*
 
16.Deductible ratios for consumers whose total monthly income is more than SAR 15,000 and less than SAR 25,000 must be subject to the following restrictions:
 
 a.The monthly credit obligations of finance, which are linked only to the monthly deduction of the gross salary, must not exceed 33.33% of the gross salary for employees and 25% for retired consumers.
 
 b.Monthly credit obligations, excluding monthly credit obligations for real estate finance must not exceed 45% of the total monthly income of the consumer.
 
 c.Monthly credit obligations of finance must not exceed 65% of the total monthly income of the consumer.
 
17.Deductible ratios for consumers whose total monthly income is SAR 25,000 and more must be subject to the following restrictions:
 
 a.Monthly credit obligations of finance, which are linked only to the monthly deduction of the gross salary, must not exceed 33.33% of the gross salary for employees and 25% for retired consumers.
 
 b.Credit obligations of finance are subject to the credit policies of the creditor. The creditor must assess the ability of its consumers to meet monthly credit obligations stated herein.
 
18.Finance term must not exceed (5) years or (60) months from granting such finance, except for real estate finance and credit cards.
 
19.SAMA may review and amend periodically the ratios in Paragraphs 15, 16, and 17 hereof, taking into account the soundness and stability of the financial system and the forecasts for economic growth.
 

*Amended in accordance to SAMA circular No. (40694/1) dated 09/09/1439.