Micro, Small and Medium Enterprises (MSMEs) Disclosures in the Annual Report — SAMA — SA

In the Name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Head Office

Banking Policies Department
Ref: 391000007761
Date: 22/01/1439
Attachments: 2

Circular

To the Esteemed ................................................................................................., Greetings:
Subject: Annual Disclosure of Data for Micro, Small and Medium Enterprises (MSMEs).

MSMEs play a vital role in contributing significantly to the gross domestic product of many global economies, with their contribution to advanced economies reaching approximately 70% of GDP, while their contribution in the Kingdom stands at around 20%. Diversifying revenue sources and increasing the non-oil sector's contribution to the Kingdom's economy are key objectives of Saudi Vision 2030. SAMA works with banks to review systems and regulations meticulously to remove obstacles and enhance the effectiveness of MSME units within operating banks in the Kingdom. Reference is also made to SAMA Circular No. 381000064902 dated 16/6/1438, which adopted the new definition of MSMEs. This definition was also endorsed by the General Authority for Small and Medium Enterprises to include micro-enterprises, along with introducing key performance indicators and adjusting prudential data for MSMEs, as per Circular No. 381000094106 dated 6/9/1438. In this regard, SAMA has introduced a report containing quantitative and qualitative data on MSMEs. Banks are required to include this in their annual board report starting from 2017, as attached in Annexure (I). Annexure (II) contains a list of answers to frequently asked questions on the subject. Should you have any questions or inquiries, please contact Mr. Yaser bin Mohammed Al-Omar (yalomar@sama.gov.sa) or Mr. Qaisar Noor (qnoor@sama.gov.sa).

Yours sincerely,

Ahmed bin Abdullah Al-Sheikh
Deputy Governor for Supervision
On behalf of: Hashim bin Uthman Al-Haqeel

Distribution Scope: Banks operating in the Kingdom.
P.O. Box 2992, Riyadh 11169, Telegram: MARKAZI, Fax: 404400, Phone: 4666666

Annexure I

Micro, Small and Medium Size Enterprises (MSMEs) disclosures in the annual report

Qualitative disclosures
Qualitative information on:

Currently approved definition of MSMEs
Initiatives for MSMEs taken by the Bank
MSME unit and staff in the unit

MSMEs training initiatives and workshops for staffs and customers should be presented in the following format


Number of *man-days training provided to staff
Number of *man-days training provided to customers

*Man-days means 8 hours per day.

Quantitative disclosures
The below table for MSMEs is required for both current and previous years.

Annexure II

Frequently Asked Questions (FAQ)

Q1: Should the quantitative MSME loan figures include both on and off balance sheet items?

A1: Yes, the figures should include both on and off balance sheet items. Off balance sheet items should be reported at notional amount. The rows have been expanded in the quantitative tables to include separate information for both on balance sheet and off balance sheet lines.

Q2: Should the bank apply the recently prescribed definition of MSME?

A2: The Banks should implement the recently prescribed definition of MSME as mentioned in the SAMA circular (381000064902) dated 16/6/1438 starting from 1 January 2018. If readily available, banks are encouraged to use new definition to populate these tables for 2017 annual report. If the banks don't have available data, they can report using the old definition under SAMA circular (29697\BCS\14849) dated 22/April/2012. However, in both cases, the banks should clarify this in the notes accompanying the tables.

Q3: Can banks include customer/staff training that last less than the pre-defined 8-hour Man-Day definition?

A3: Yes, banks can include those training hours in the qualitative disclosure segment.