The head of the Media and Awareness Committee for Saudi Banks, Talaat Hafez, confirmed to Al-Youm that banks will start applying decreasing interest on loans from September 16, as part of the implementation of a number of updated regulations recently approved by the Saudi Arabian Monetary Agency (SAMA).<\/p>\n
Hafez said that this comes within the framework of applying the specific controls for consumer finance issued by the Saudi Arabian Monetary Agency, indicating that they are not new controls as some believe, but rather a previous one issued in 2005, and these updated ones will be applied in all commercial banks operating in Saudi Arabia.<\/p>\n
He added: The first purpose of these updated controls is to add more transparency, disclosure and clarity for the borrower, and this does not diminish the previous controls. For example, the calculation method is now known as the EBR or the annual rate is calculated in all commercial banks according to one clear and specific formula for its inputs, and the result may differ from bank to bank and from one customer to another due to other considerations and controls.<\/p>\n
Hafez said that the EBR calculates the annual commission rate based on the decreasing installment of the loan, and the interest is not calculated on the entire loan regardless of what has been repaid, making it easier for the borrower to compare the annual percentage rate calculated between different banks operating in the Kingdom.<\/p>\n
He pointed out that one of the positives of the updated controls is the early repayment service, which stipulates that in the case of early repayment, the customer may not be charged the cost of the remaining unmatured loans except in two cases, namely: If there is a process of what is called the cost of reinvestment, which is a type of investment that banks work with, and therefore in some cases the bank bears some costs for that, but the updated controls specified a maximum of three installments whose returns are calculated and not more than that, and the second case if there are additional costs and fees that the bank can install and document, and without a doubt these controls will serve the customer more strongly than the situation was previously in the case of early repayment.<\/p>\n
Among the most important provisions of the updated regulations are detailed, clear and explicit texts: The follow-up of the defaulting customer should not deviate from the purely professional controls, and the bank should not cause any kind of offense - so to speak - to the defaulting customer, and the financing entities must follow the legal and correct professional methods to obtain their rights in accordance with the regulations in force in the Kingdom.<\/p>\n
Regarding the pending Black Swan threats, Hafez said: \"The security situation of the financial system of banks is reassuring, and the observed frauds are minimal and not alarming.<\/p>\n
He explained that information and electronic hacking has become using modern technology in the hacking process, and it has several new forms and patterns than before, and it deceives the customer and lures him in many ways, and contains the highest patterns of financial fraud to gradually gain access to his credit information, including his secret numbers, and this makes banks and financial institutions in a continuous confrontation and permanent work to spare their customers and their financial system from that fraud.<\/p>\n
He added that the volume of withdrawals through banks' ATMs through the Saudi Payments Network (SPAN) amounted to 658 billion riyals in 2013, while the number of operations carried out reached 1.3 billion operations.<\/p>\n
Source: Electronic Day<\/p>","protected":false},"excerpt":{"rendered":"
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