Instructions

To:
Gentlemen/
Peace, mercy, and blessings of God be upon you,

Subject: Updating controls and procedures for collecting debts from individual customers.

Based on the powers of the Saudi Central Bank under its system issued by Royal Decree No. (36/M) dated 11/4/1447H, and other related systems, and given the cancellation of the controls and procedures for collecting debts from individual customers under Circular No. (391000083340) dated 26/7/1439H,

Attached are the (updated) controls and procedures for collecting debts mentioned above, including a number of changes, the most prominent of which are as follows:

1. Defining the term "Total Disability" by introducing a definition in Article One regarding definitions.
2. Updating provisions related to the restructuring of installments for defaulting customers.
3. Modifying provisions related to exempting financing customers from payments due to death or total disability.
4. Defining a standard for telephone communication with individual customers.
5. Regulating the mechanism for financing companies to deduct due installment amounts from their customers' accounts.
6. Regulating the mechanism for deducting debts from co-borrowers in a financing contract, taking into account the agreed bearing ratio for each customer in the financing contract.

For your information and implementation effective from its date.

And please accept my regards,
Yazid bin Ahmed Al Sheikh
Deputy Governor for Supervision

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Distribution Scope:

• Banks and 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 +971 11 63F 3... Kingdom of Saudi Arabia Phone: Riyadh, P.O. Box 2992.

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# Debt Collection Regulations and Procedures  
(Second Issue - Ramadan 1446H - March 2025M)

**Important Note:**  
To keep up with updates and amendments regarding instructions issued by the Saudi Central Bank, the Saudi Central Bank emphasizes the necessity of always relying on the versions published on its website: [www.sama.gov.sa](http://www.sama.gov.sa)

Saudi Central Bank

# Table of Contents

| Page Number | Subject |  
|-------------|----------|  
| 2           | Chapter One: General Provisions |  
| 4           | Chapter Two: Controls on Communication with Customers and Guarantors |  
| 4           | Chapter Three: Collection Procedures |  
| 5           | Chapter Four: Collection Management Controls |  
| 9           | Chapter Five: Final Provisions |

# Chapter One  
## General Provisions

### Article One: Definitions

The following words and expressions – wherever they appear in these controls and procedures – have the meanings indicated opposite them, unless the context dictates otherwise:

| Term | Definition |  
|----------|----------|  
| Central Bank | The Saudi Central Bank. |  
| Controls | Debt Collection Regulations and Procedures. |  
| Collection | Financing entities collecting amounts due from the customer – or their guarantor in case of default – according to the provisions of the financing contract. |  
| Financing Entities | Banks, financial institutions, and financing companies subject to the supervision and control of the Saudi Central Bank in accordance with prevailing systems. |  
| Customer | A natural person who has obtained a financing product. |  
| Guarantor | A natural person who undertakes to perform all or part of the customer's obligations. |  
| Third Party | An external party that performs or carries out any of the collection procedures on behalf of financing entities. |  
| Change in Customer's Circumstances (Involuntary) | An event that leads to an involuntary change in the customer's financial circumstances that significantly affects their ability to meet their financial obligations, for example, but not limited to: disability (partial or total), loss of job or loss of some fixed allowances provided to the customer by their employer on a monthly basis, or a salary reduction. |  
| Change in Customer's Circumstances (Voluntary) | An event that leads to a change in the customer's financial circumstances based on their own will, for example, but not limited to: early retirement or resignation. |  
| Default | The customer's failure or delay in paying a certain number of due installments or a portion thereof as specified in the financing contract, in accordance with the provisions of Paragraph (1) of Article (Eighteen) of the Controls. |  
| Total Disability | A health condition that prevents the customer from living their normal life and results in the customer being medically unfit for work according to official reports issued or approved by the competent authority according to the system. |  
| Complaint | Any expression of the customer's dissatisfaction with the service or product provided, whether justified or unjustified, in writing or verbally. |  
| Temporary Contact | An official contact method that can be verified and retrieved in paper or electronic form. |  
| Customer Consent | Prior consent from the customer through temporary contact methods. |

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| Telephone Contact | The call that the customer answered and interacted with the employee regarding. |  
| :--- | :--- |  
| Communication | The process of exchanging information and data by any means of documented contact between financing entities and the customer, whether verbal or non-verbal (such as sign language) for persons with disabilities. |  
| Employees | Any natural person working for the benefit of financing entities and under their management or supervision for remuneration, including – for the purpose of applying the controls – all employees contracted directly or contracted through a third party. |  
| Day | A calendar day, including the weekend and official holidays. |

Article Two: Objectives

The controls aim to enable financing entities to:

1. Improve the efficiency of collection by putting effective procedures in place to reduce the ratio of defaulted debts.

2. Observe professional behavior in dealing with customers.

3. Follow the minimum procedures that must be adhered to when communicating with customers or their guarantors for the purpose of restructuring potential debts or during collection.

4. Protect the privacy of customers and their guarantors.

Article Three: Scope of Application of the Controls

The controls apply to financing entities and third parties.

Chapter Two  
Controls on Communication with Customers and Guarantors

Article Four: Controls on Communication with Customers

Financing entities must comply with systems, instructions, standards, and professional behavior when communicating with the customer or their guarantor, and adhere to the following as a minimum:

1. Protect the financial and personal information of customers and guarantors and maintain their privacy, and not use that information except for specific professional and systemic purposes and with the customer's consent.

2. Not make any telephone contact with anyone other than the customer or their guarantor, and verify the identity of the person receiving the call at the beginning of the telephone contact.

3. Limit telephone contact attempts with the customer or guarantor to no more than ten telephone calls – as a maximum – every thirty days for each financing product – if exceeded – and enable the customer or guarantor to block the call on the number from which the call was made, and communication must take place during official working hours.

4. Document communication with customers or guarantors (incoming or outgoing), and retain records for a period of no less than ten years from the date of communication. It must also be clarified to the customer or guarantor at the beginning of the telephone call that it is recorded.

5. Enable customers or guarantors to evaluate their satisfaction at the end of the telephone call – whether for collection or a formal survey – and this must be documented automatically.

6. Activate direct channels for communication with customers to enable them to inquire or clarify regarding existing claims.

7. Not communicate with the customer or their guarantor by using envelopes with words on them indicating that they contain collection information or similar.

8. Not visit the customer or their guarantor under any circumstances, whether at their residence or workplace.

Chapter Three  
Collection Procedures

Article Five: Communication Mechanism with Customers:

When financing entities communicate with customers or their guarantors for the purpose of collection; they must adhere to disclosure and transparency, and adhere to the following:

1- Limit documented contact methods to the following:

1-1 Email.  
2-1 Registered mail (National Address).  
3-1 Text messages.  
4-1 Telephone contact.  
5-1 The financing entity's application or website.  
6-1 Judicial notification.

2- Provide the customer with the necessary data related to communication, including the following:

1-2 The name of the financing entity and the department responsible for collection, or the third party and the name of the financing entity on whose behalf communication is made.

2-2 The contact number with the responsible department or third party.

3-2 Working hours of the responsible department or third party.

4-2 The name of the employee in case of telephone contact.

3- Designate the Arabic language as the primary language for communication, except for communication with non-Arabic speakers, while fully adhering to what is stated in the controls.

4- In case the communication is written, all phrases and numbers used must be easy to understand and in a clear and readable font, including top or bottom margins.

Article Six: Handling Objections:

In the event of an objection from the customer or their guarantor regarding the amount claimed; financing entities must follow the following:

1- Document the complaint automatically in the customer's file to enable them to view it.

2- Register the complaint for the customer or guarantor according to instructions issued by the Saudi Central Bank on this matter.

3- Provide the customer or guarantor with the expected time period for handling the complaint, which must exceed the periods specified by the Saudi Central Bank for handling complaints.

4- Not communicate with the customer or their guarantor to warn them of default until the complaint is handled.

5- Present the results of handling the complaint to the customer or guarantor, supported by documents supporting the handling decision.

6- In the event that the customer or guarantor is not satisfied with the result of their complaint and wishes to escalate it; financing entities must provide the customer with the mechanism followed and direct them to the appropriate authority for this purpose.

Chapter Four  
Collection Management Controls

Article Seven: Mechanism for Determining the Deduction Date from Customer Accounts:

Financing entities must do the following:

1. Determine the deduction date in accordance with the salary deposit date for salary customers, or in accordance with the date agreed upon between the customer and financing entities for non-salary customers; as it must be specified in the financing contract or in the repayment schedule. It is also necessary to take into account cases of changing the salary deposit date, whether permanently or temporarily (such as cases where the salary deposit date coincides with the weekend or holiday dates).

2. Adhere to deducting the installment on the agreed date. In the event that the agreed date is exceeded for a reason attributable to the financing entity and the customer's consent is not obtained for deduction in the event of a delay after the agreed date; then the financing entity is obliged to add

a similar period at the end of the financing period without calculating any extension cost or additional fees, and notify the customer of this through documented contact methods.

Article Eight: Controls on Deducting Installments from Customer Accounts:

1. Financing entities are prohibited from doing the following:

1,1 Deducting any amounts from the customer's accounts without a court order or decision, or without obtaining the customer's consent, or if the financing contract does not include what permits deduction for banks and banks, or an agreement on the mechanism for deducting due financing amounts granted without salary guarantee through the customer's bank accounts for financing companies.

1,2 Seizing customer accounts or balances – even temporarily – and not enabling them to benefit from the amounts available in the accounts without a court order or decision, or without obtaining the customer's consent, or if the financing contract does not include what permits seizure, without prejudice to systemic provisions and related provisions contained in the controls.

1,3 Deducting more than one installment per financing contract during one salary deposit cycle; unless there is a court order or decision, or with the customer's consent.

1,4 Deducting the installment on a date preceding the agreed due date, or seizing the value of the installment before the due date.

1,5 Seizing or deducting end-of-service benefits for employees; unless there is a court order or decision, or the customer's consent.

1,6 Imposing late fees or collection fees exceeding the amount due and the highest value of one installment for the entire financing period.

2. Financing entities must adhere to the deduction limits from the accounts of customers included – in the case of joint financing contracts – agreed upon with each customer individually according to the financing contract concluded.

Article Nine: Management of Potential Default Cases:

1. For the purpose of applying the controls, financing entities must consider calculating default according to the following:

1,1 Regarding the customer's default in paying monthly installments:

Upon proving that the customer has failed to pay installments in full or in part for (3) three consecutive months, or delaying the payment of (5) five separate installments for (7) seven working days or more; for each installment from its due date throughout the contract period, and for every (5) years of the real estate financing contract duration.

1,2 Default in financing contracts (non-monthly installments):

Upon proving that the customer has failed to pay the due installment (quarterly, semi-annually, annually) for a period exceeding (60) working days, or delaying the payment of four separate installments for (20) twenty working days from the agreed due date in the financing contract, or more than five separate months throughout the financing period, and for every (5) years of the real estate financing contract duration.

2. Financing entities must find proactive solutions when signs of default appear in the customer's credit situation that may lead to default, including as a minimum the following:

2,1 Offering the option of debt restructuring to the customer in the event of proving their circumstances (voluntary) default without granting new financing, and without any additional fees, and without any change in the cost of extension, and financing entities must execute the restructuring – if requested by the customer – within a period

not exceeding (20) working days from the date of providing the customer with the necessary documents. Financing entities must also postpone the process of deducting installment amounts until the restructuring procedures are completed.

2,2 Restructuring the debt for the customer in the event that the reason is attributable to the negligence of financing entities in evaluating the customer's creditworthiness, including, for example, but not limited to, exceeding the system-specified deduction ratios, provided that this is done without granting new financing and without any additional fees and without any change in the cost of extension.

3. Financing entities may offer the option of debt restructuring to the customer in the event of proving their circumstances (voluntary) default, with the possibility of changing the cost of extension. And without any additional fees, provided that the restructuring is executed – if requested by the customer – within a period not exceeding (20) working days from the date of providing the customer with the necessary documents.

Article Ten: Management of Default Cases:

1. Financing entities must – before proceeding to the competent authorities – adhere to communicating with customers and their guarantors for the purpose of collection, and exercise due care when managing the process of settling and collecting defaulted debts, including, for example, but not limited to:

1,1 Establishing the necessary standards to ensure employee compliance with the required task, and providing customers with correct and comprehensive information about their current status, the procedures governing collection, as well as the systemic procedures that may be taken in the event of default or non-payment.

1,2 Developing internal work procedures between relevant departments, so that they include service level agreements and an escalation mechanism to ensure the handling of customer objections and complaints within the period specified in the instructions issued by the Saudi Central Bank on this matter, and this mechanism must be documented and presented to the departments to adhere to it.

1,3 Establishing a policy to organize collection procedures from customers or their guarantors, and it must be approved by the Board of Directors or the Manager – as appropriate – and must consider, as a minimum, the following:

- a. Solutions that can be offered to the defaulting customer based on their credit capacity, including, for example, but not limited to, settling the debt between the two parties, or restructuring the debt and postponing installments, while avoiding providing financing solutions that would lead to an increase in the financial burden on the customer, such as granting them additional financing.

- b. Procedures through which the financing entity ensures providing the customer with all clear and comprehensive information to the greatest extent possible to help them understand the collection procedures and the consequences of default, as well as understanding the proposed solutions and the benefits between them in case more than one solution is offered.

- c. Analysis of complaints and objections and their reasons, and dealing with their causes and sources of emergence, and the role of the department responsible for handling complaints in documenting these reports and measuring their effectiveness in handling the sources of recurring complaints.

- d. Periodic review of the policy and verifying its compatibility with best practices, and with the provisions of systems, regulations, and instructions related to it, and updating it whenever necessary – or every two years at the latest.

- e. Ensuring that financing employees and third parties specialized in collection tasks are informed of the policy and provide proof of having read it.

Article Eleven: Management of Total Disability or Death Cases:

1. Financing entities must exempt the customer and their guarantor from the amounts claimed under the financing contract or joint financing contract – according to their percentage of obligations in the financing contract in the event of death or total disability – without making the exemption conditional on the approval of insurance service providers or any external party, and financing entities must adhere to completing the procedures within a maximum period of thirty days from the date of receiving the death certificate or total disability report, and returning any amounts deducted in excess from the date of death or total disability, and transferring ownership of the financed asset to the customer – according to the ownership percentage in joint contracts – or lifting the mortgage, or to their heirs, or lifting the mortgage – as appropriate – unless the two parties agree to include any of the following exceptions:

1,1 Financing contracts concluded before the date 1/10/2018M.

1,2 Cases of total disability resulting from:

- a. The customer injuring themselves, or attempting suicide.

- b. Natural disasters.

- c. Judicial rulings issued by the courts of the Kingdom.

- d. Consumption of alcohol, drugs, or non-systemic medications.

- e. Participating in or training for dangerous sports, or dangerous competitions; for example: (participating in horse races or car races).

- f. What results from or arises from or is contributed to by nuclear weapons or nuclear radiation or radiation pollution from any fuel or any nuclear waste resulting from the burning of nuclear fuel, and war, invasion, aggressive acts, or quasi-military acts, and acts of sabotage and terrorism committed by a person or persons acting individually or on behalf of or in connection with any terrorist organization.

2. Financing entities are prohibited from demanding in customer exemption procedures, and are required to immediately begin requesting documents related to them, namely the death certificate, or the medical report issued by a competent authority containing proof of total disability, and exercise due care to handle and complete the exemption process within the time frame specified in the controls.

Chapter Five  
Final Provisions

1. Financing entities must adhere to what is stated in the controls, and they bear responsibility for any violations committed by any of their employees or the third party.

2. The controls are considered a minimum of what financing entities must do to exercise due care when carrying out collection procedures at all stages. They must also continuously develop their internal procedures to be compatible with the nature and size of their business, and in accordance with the best local and international standards and practices related to it; without conflicting with the controls and other related systems and instructions.

3. The department responsible for managing collection operations must be subject to review and audit by the internal audit department and the compliance department of the financing entity on an annual basis; to ensure the integrity of procedures and their compatibility with the controls and other related systems and instructions.

4. It is the responsibility of financing entities to evaluate and study the customer's credit and financial situation and ensure their ability to meet their obligations throughout the contract period, taking into account and estimating changes that may occur in their situation in accordance with instructions issued by the Saudi Central Bank on this matter.

5. The controls are considered an update of previous regulations or instructions issued on this matter, and the controls replace the provisions of the Debt Collection Regulations and Procedures for Individual Customers (First Issue), and financing entities and third parties must update their policies, procedures, contracts, and agreements to be compatible with them.

6. The controls are implemented from the date of their publication on the Saudi Central Bank's website.