Regulatory Alerts2021-10-21
Duration Instructions for issuing a clearance letter, account transfer and indebtedness
The Saudi Central Bank issued the Duration Instructions for issuing a clearance letter, account transfer and indebtedness to standardize processing timeframes for financing institutions across the Kingdom. The circular mandates that banks and financing companies execute customer requests within specified working days—one to seven days depending on the service type—and supersedes prior timeframe regulations while exempting cases with existing judicial rulings or pending proceedings. Institutions must leverage technological systems and electronic verification to ensure compliance, thereby enhancing customer protection, transactional fairness, and market competition.
Saudi Central Bank
Circular
Number: 43023350 Date: 1443/03/15 Attachments: 4 pages
To the Esteemed, Peace, mercy and blessings of God be upon you,
Subject: Duration Instructions for issuing a clearance letter, account transfer and indebtedness.
Based on the powers delegated to the Saudi Central Bank under its system issued by Royal Decree No. M/36 dated 1442/04/11, the Banking Control System issued by Royal Decree No. M/5 dated 1386/02/22, and the Financing Companies Control System issued by Royal Decree No. M/51 dated 1433/08/13, and with reference to the timeframes for issuing a clearance letter, account transfer, and indebtedness transfer stipulated in several related circulars of the Saudi Central Bank.
Attached are the Duration Instructions for issuing a clearance letter, account transfer and indebtedness, which in turn supersede the timeframes specified in several related Saudi Central Bank circulars. These instructions exempt cases subject to judicial rulings, as well as pending cases before the competent authorities.
For information and implementation within thirty working days from its date.
Yours sincerely,
Fahd bin Ibrahim Al-Shathri Deputy Governor for Supervision
Distribution Scope:
- Banks operating in the Kingdom.
- Financing companies operating in the Kingdom.
Duration Instructions for issuing a clearance letter, account transfer and indebtedness
(First Issue - Rabi' al-Awwal 1443 AH / October 2021 CE)
Important Note: To keep pace with updates and amendments to circulars issued by the Saudi Central Bank, the Bank emphasizes the necessity of always relying on the versions published on its website: www.sama.gov.sa.
Table of Contents
| Part | Page Number |
|---|---|
| Chapter One: Definitions and General Provisions | 3 |
| Chapter Two: Customer Request Processing Timeframes | 4 |
| Chapter Three: Final Provisions | 4 |
Page 2 of 4
Chapter One Definitions and General Provisions
1. Definitions: The following words and expressions, wherever they appear in these Instructions, carry the meanings indicated opposite each of them, unless the context otherwise dictates: The Bank: The Saudi Central Bank. The Instructions: Duration Instructions for issuing a clearance letter, account transfer and indebtedness. Financing Institutions: Banks and financing companies subject to the supervision and oversight of the Saudi Central Bank. Banks: Banks licensed to conduct banking business in accordance with the provisions of the Banking Control System. Customer: A natural person who is a beneficiary of the products or services of financing institutions. Account Transfer: Transferring a customer's account balance from one bank to another, with the closure of the source account.
2. General Provisions: 2.1 These Instructions aim to specify the timeframes that financing institutions must adhere to when receiving a customer's request for issuing a clearance letter, account transfer, or indebtedness transfer, to contribute to customer protection, ensure transactional fairness, and enable competition. 2.2 These Instructions do not derogate from the provisions of related circulars and any subsequent amendments thereto, including - by way of example, not limitation - the following:
- Principles for protecting banking customers communicated via Saudi Central Bank Circular No. (341000095960) dated 1434/08/03.
- Updated consumer financing regulations communicated via Saudi Central Bank Circular No. (351000116619) dated 1435/09/10.
- Saudi Central Bank Circular No. (361000083199) dated 1436/06/11 regarding instructions for the inter-bank purchase of individual customer indebtedness (Consumer Financing Buyout).
- Regulations for the issuance and operation of credit cards and monthly discount cards communicated via Saudi Central Bank Circular No. (361000090389) dated 1436/06/26.
- Principles for protecting financing company customers communicated via Saudi Central Bank Circular No. (361000110320) dated 1436/08/14.
- Saudi Central Bank Circular No. (391000028242) dated 1439/03/10 regarding the transfer of real estate financing indebtedness.
- Saudi Central Bank Circular No. (391000086876) dated 1439/08/09 regarding the inter-financier purchase of real estate financing indebtedness.
Page 3 of 4
Chapter Two Customer Request Processing Timeframes
3. Clearance Letter: Financing institutions shall execute a customer's request for issuing a clearance letter - regardless of its purpose, including salary transfer - in the absence of any existing and due financial obligations on the customer, within a period not exceeding one working day from the date of receiving the request, and seven working days for customers holding a credit card and/or monthly discount card.
4. Account Transfer: Banks shall execute a customer's request for account transfer within a period not exceeding one working day from the date of receiving the request.
5. Indebtedness Transfer: 5.1 Consumer Financing: Financing institutions (indebtedness sellers) shall execute a customer's request to transfer indebtedness by completing the forms specific to consumer financing indebtedness transfer within a period not exceeding one working day from the date of receiving the request. 5.2 Real Estate Financing: a- Financing institutions (indebtedness sellers) shall execute a customer's request to transfer indebtedness by completing the forms specific to real estate financing indebtedness transfer within a period not exceeding three working days from the date of receiving the request. b- Financing institutions (indebtedness sellers) shall complete the processing of a customer's request within a period not exceeding five working days from the date of receiving approval from the financing institution (wishing to purchase the indebtedness) regarding the transfer.
Chapter Three Final Provisions
- These Instructions exempt cases subject to judicial rulings, as well as pending cases before the competent authorities.
- Financing institutions shall take all necessary measures and procedures to ensure compliance with the timeframes specified in these Instructions, and should utilize technological systems and electronic services to process customer requests, including the issuance and electronic verification of documents.
- The timeframes stipulated in these Instructions supersede the timeframes contained in other related Saudi Central Bank circulars.