SAMA and Financial Sector’s Initiatives .. Sustainable Development in the Time of COVID-19 Pandemic

A tremendous development of the economic and financial system in the Kingdom of Saudi Arabia can be observed since the emergence of Corona virus (COVID-19). A high level of professionalism in dealing with local and global developments in an attempt to maintain the stability and sustainability of the economy. Through successive and precise steps, the Saudi Arabian Monetary Authority (SAMA) in cooperation with the initiatives of the financial sector in general and banks and insurance companies in particular managed to draw a beautiful picture of the social responsibility toward the community and the national economy.
SAMA issued several decisions in order to preserve the stability of the economy and markets and mitigate the impact of this pandemic. Those decisions contribute to enhancing the durability of the economy and proves its flexibility and financial solvency, and protect the components of the national economy including major companies, medium and small companies down to emerging projects which if affected by those consequences, many of them would have left the market and the consequences would have been disastrous for the society. This includes decisions concerning individuals dealing with the financial system which contribute to maintaining the integrity of their dealings, and protecting them from the impact of this crisis.
In this report, we review these decisions:
SAMA presented a package of initiatives, worth 50 billion riyals, in addition to issuing fundamental decisions:
First: Supporting the financing of small and medium enterprises. This program consists of three basic elements aiming at reducing the burdens of fluctuating cash flow and to support working capital for this sector in order to enable growth during the coming days and maintain the continuity of employment, as follows:
Deferred Payments Program: Deposing an amount of 30 billion riyals in favor of banks and financing companies, in exchange for delaying the collection of their dues with small and medium enterprises for a period of six months from its date.
Funding for lending program: Depositing an amount of 13.2 billion riyals soft finance for small and medium enterprises by granting loans through banks and financing companies.
Loan Guarantee Program: SAMA incurred the fees of ‘Kafaalat’ issued by the Guarantee program in the amount of (6) billion riyals for the benefit of banks and financing companies. This is to exempt small and medium enterprises from costs of the loan financing Kafaalh in order to contribute to reducing lending cost for those facilities and to support the expansion of financing.
Second: Supporting the fees of POS transactions and e-commerce:
SAMA incurred the fees of the points of sale (POS) and e-commerce transactions at an amount of (800) million riyals, as fees for payments to all stores and private sector facilities on their behalf by paying them to the payment service providers participating in the national system for a period of (3) months
Third: Regarding establishments affected by the precautionary measures that were adopted in the cities of Makkah Al-Mukarramah and Al-Madinah Al-Munawwarah; SAMA coordinates with banks and financing companies to facilitate payments related to financing these facilities.
Fourth: SAMA directed the banks and financing parties to restructure current financing contracts without any additional costs or fees, so that companies can continue paying the salaries of their employees and workers in light of this crisis.
Fifth: SAMA requested providing the financing needs, such as facilitated interim loans for a period of at least 6 months. This is to contribute to the payment of employee salaries at enterprises affected by the spread of the Corona virus. To that end, it is necessary to provide SAMA urgently with the approved plans of the bank to support its customers from those facilities to maintain their employment levels.
Regarding Individual initiatives, SAMA requested banks to ensure the availability of the necessary operational support to ensure the continuity of payment systems and financial inclusion by making all channels available to customers. This is including raising the POS purchase limit and free financial transfers between banks operating in the Kingdom in Saudi riyals through (SARIE) system for individuals and companies. Additionally, SAMA obligated companies operating in the insurance sector to provide all electronic channels to serve customers’ needs from issuing and renewing insurance documents, receiving and settling claims electronically, and receiving various requests and inquiries from customers.
SAMA also obligated the financial institutions to place a maximum number of clients who are served at the same time in the operating branches during this period, taking into account adequate spaces between customers in the waiting rooms as well as between the employees of financial institutions and customers, while adhering to the necessary precautionary measures directed by the Ministry of Health On this side.
SAMA also issued a decision to raise the limit allowed for payments via bank cards through POS (mada atheer) to the amount of (300) riyals, without the need to enter the passcode number in cooperation between banks and payment service providers with Saudi payments. This decision aims to reduce the number of opportunities for customers to contact POS devices, which limits the spread of the virus.
In addition, SAMA issues a decision to raise the transfer limit for digital wallets to (20) thousand riyals instead of (10) thousand riyals, to contribute to the digital transformation in line with the needs of customers during this crisis.
SAMA directed banks and finance companies to postpone the installments for a period of six months without interest or additional costs, for those affected by losing their jobs during this crisis, including the following decisions:
1- Exempting all bank clients from any fees for conducting banking operations through electronic channels and other fees for a period of six months, and also exempting the fees for activating any services again during that period.
2- All customers are exempted from the low balance fees for the minimum period of six months.
3- Exempting all clients from any fees imposed on refinancing operations or terminating existing agreements for a period of six months.
4- Review and re-evaluate interest rates and other fees on credit cards, in line with the current low interest rates, and rationally recalculate the interest rate.
5- Return the foreign currency exchange fee to clients who used bank or credit cards to pay for their travel and accommodation reservations abroad whom circumstances forced them to cancel their reservations.
6- SAMA has taken all preventive and precautionary measures to deal with the currency in times of virus spread, by isolating incoming currencies from abroad to SAMA’s branches through banks and money transfer companies in order to prevent the spread of the virus among traders.
7- Activating the business continuity plan to ensure that payment system services are not interrupted and the financial and banking systems continue to operate without affecting the quality of the services provided. This is including ensuring that services continue to be provided through electronic channels, in addition to educating customers about all available channels for online and remote communication in order to preserve their safety, as well Call centers have been activated to receive various requests and inquiries of customers continuously.