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2022-04-05

Circular Re. The Instructions for Creditors on Dealing with Promissory Notes

The Saudi Central Bank (SAMA) issued binding instructions effective July 1, 2022, to standardize how financial institutions handle promissory notes and protect consumer rights. The document defines key terms such as 'default' and 'affected communication' while establishing minimum compliance standards for creditors. These regulations operate alongside existing SAMA directives, including those on individual customer collection procedures.

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Saudi Central Bank

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Circular

Dear Sirs,

Peace, mercy, and blessings of God be upon you,

Subject: Instructions for Financial Institutions on Dealing with Promissory Notes.

Based on the authorities delegated to the Saudi Central Bank under its system issued by Royal Decree No. M/36 dated 11/4/1442H, the Banking Control System issued by Royal Decree No. (M/5) dated 22/6/1386H, and the Financing Companies Control System issued by Royal Decree No. (M/51) dated 13/8/1433H, and with the Saudi Central Bank's commitment to protecting the rights of participants in the financial sector, and its endeavor to unify the procedures for dealing with promissory notes by financial institutions, we hereby attach the instructions issued in this regard.

To respond and act in accordance with them effective from 1/7/2022.

Accept my regards,

Fahd bin Ibrahim Al-Shathri Deputy Governor for Supervision

Distribution Scope:

  • Banks and branches operating in the Kingdom.
  • Financing companies operating in the Kingdom.

Instructions for Financial Institutions on Dealing with Promissory Notes

(Ramadan 1443H / April 2022)

Important Note: To keep pace 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

Table of Contents

Page NumberChapter
3Chapter One: Definitions and General Provisions
4Chapter Two: Instructions for Financial Institutions on Dealing with Promissory Notes
5Chapter Three: Final Provisions

Chapter One

Definitions and General Provisions

1. Definitions:

The following words and expressions, wherever they appear in these Instructions, have the meanings indicated opposite each of them, unless the context requires otherwise:

  • The Central Bank: The Saudi Central Bank.
  • The Instructions: Instructions for dealing with promissory notes.
  • Financial Institution: Banks, branches, and financing companies subject to the supervision and control of the Saudi Central Bank.
  • Client: A natural or legal person who has obtained a financial product from a financial institution.
  • Defaulter: The client's failure to pay the agreed monthly installments in the financing contract for three consecutive months, or more than five separate months throughout the financing period, or as stipulated in the financing contract for non-monthly installments.
  • Third Party: An entity contracted to act on behalf of the financial institution to provide a service that was previously performed by the financial institution or a new service it intends to start implementing. It may be a unit of the financial institution itself, a subsidiary of the financial institution, or an independent entity.
  • Affected Communication: A verifiable and retrievable registered means of communication in written or electronic form.

2. General Provisions:

2.1 These Instructions aim to establish the minimum provisions that financial institutions must comply with when dealing with promissory notes.

2.2 These Instructions do not prejudice the provisions contained in related Instructions, including, but not limited to:

  • Controls and procedures for the collection of individual clients issued under Central Bank Circular No. 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