Regulatory Alerts2007-01-09
Controls on Customers' Blank Order Bonds Signed in Exchange for Banking Facilities
The Saudi Arabian Monetary Authority (SAMA) issued this circular to regulate the use of blank order bonds signed by customers in exchange for banking facilities. It mandates that banks ensure all bond details are completed upon signing, return and replace bonds when renewing or modifying loans, restrict claims to the actual amount due based on account statements, and prevent the use of bonds for purposes other than their original intent. These controls take effect immediately to prevent misuse and ensure compliance with existing anti-fraud and commercial paper regulations.
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