Regulatory Alerts2021-03-01
Consideration of Loans Granted by the Development Funds and Banks Affiliated with the National Development Fund
The Saudi Central Bank mandates that all domestic banks, commercial banks, and financing companies calculate deductions from National Development Fund-affiliated development funds within customers' monthly debt-to-income ratios when evaluating individual financing applications. Relying on reports from approved credit reporting agencies, this directive requires financial institutions to treat these specific government-backed loans as standard monthly obligations in line with the Responsible Financing Principles. Institutions must apply this calculation method to accurately reflect borrowers' total repayment capacity across all available financing products.
Saudi Central Bank
Circular
Number: 42049450 Date: 17/07/1442 (AH) Attachments: None
To: Respected Sirs,
Peace, mercy and blessings of God be upon you,
Subject: Consideration of Loans Granted by the Development Funds and Banks Affiliated with the National Development Fund.
Reference is made to the Responsible Financing Principles communicated via Saudi Central Bank Circular No. (46538/99) dated 02/09/1439 AH, which stipulate in Paragraph No. (13) that financing entities must calculate loans provided by government entities within customers' monthly obligations and consider them in debt-to-income ratios.
Accordingly, the Saudi Central Bank confirms that all banks, commercial banks, and financing companies must consider loans granted by the development funds and banks affiliated with the National Development Fund to individual customers, based on reports issued by approved credit reporting agencies. Furthermore, deductions made by the development funds and banks affiliated with the National Development Fund must be calculated within customers' monthly debt-to-income ratios for those seeking any financing products.
For information and necessary action.
Yours faithfully,
Fahd bin Ibrahim Al-Shathri Deputy Governor for Supervision
Distribution Scope:
- Banks and commercial banks operating in the Kingdom.
- Financing companies operating in the Kingdom.
P.O. Box 2992 Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000