Regulatory Alerts2020-01-06
Guidelines on Management of Problem Loans
The Saudi Arabian Monetary Authority (SAMA) issued these guidelines to require licensed banks to implement structured Early Warning Signal frameworks and dedicated Workout Units for proactively identifying, classifying, and resolving non-performing loans across corporate and MSME portfolios. The document mandates a standardized three-stage process—identification, corrective action, and monitoring—that utilizes economic, financial, behavioral, third-party, and operational indicators to flag borrowers for watch lists or remedial restructuring. By aligning with existing SAMA rules and the Kingdom’s legal framework, the guidelines standardize portfolio-wide asset resolution and ensure timely corrective measures before financial distress escalates to default.