Regulatory Alerts2018-12-17
Licensing Banks to Engage in Real Estate Finance or Finance Leasing Activities
The Saudi Central Bank issued this circular to confirm that licensed banks may continue real estate finance and finance leasing activities without renewing or obtaining separate licenses, subject only to securing non-objection letters for related financing products. The directive streamlines regulatory compliance by waiving license renewal requirements while maintaining adherence to existing Royal Decrees and procedural mortgage rules. Banks must continue meeting these operational standards until the regulator issues specific finance leasing directives.
In the Name of Allah, the Most Gracious, the Most Merciful
Saudi Central Bank Headquarters
Office of the Deputy Governor for Supervision
No.: 67/22129 Date: 09/04/1440 AH Attachments: None
Circular
To the Esteemed, Peace, mercy, and blessings of Allah be upon you:
Subject: Licensing Banks to Engage in Real Estate Finance or Finance Leasing Activities
Based on the authorities granted to the Bank by the Banking Control System issued by Royal Decree No. (M/5) dated 22/02/1386 AH, the Financing Companies Control System issued by Royal Decree (M/51) dated 13/08/1433 AH and its Executive Regulations, the Real Estate Finance System issued by Royal Decree No. (M/50) dated 13/08/1433 AH and its Executive Regulations, and the Finance Leasing System issued by Royal Decree No. (M/48) dated 13/08/1433 AH and its Executive Regulations, and in continuation of the Bank's Circular No. 341000082695 dated 03/07/1434 AH, which mandates banks operating in the Kingdom wishing to continue engaging in real estate finance and/or finance leasing activities to apply to the Bank for a license to do so or cease those activities, and with reference to the Bank's Circular No. 39100070455 dated 19/06/1439 AH, which covers the procedural requirements for real estate mortgages, please be advised of the following:
First, licensed banks shall continue to engage in real estate finance activities without the need to renew their existing license for such activity or obtain a separate license, provided that they obtain non-objection letters from the Bank regarding the launch of related financing products in accordance with the provisions of relevant systems, regulations, and directives.
Second, licensed banks shall continue to engage in finance leasing activities until the Bank issues specific directives on this matter, provided that they obtain non-objection letters from the Bank regarding the launch of related financing products in accordance with the provisions of relevant systems, regulations, and directives.
For your information and compliance.
Yours sincerely,
Ahmed bin Abdulrahman Al-Khalifa Governor
Distribution Scope: Banks operating in the Kingdom
P.O. Box 2992, Riyadh 11169, Tel: 4662300 - Fax: 4662543