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28/07/2015 08:59 AST
Consumer loan defaults comprised two per cent or SAR6.5 billion of the total consumer credit facilities offered by Saudi banks, which totalled SAR322.8bn in 2014, new data reveals.
The Saudi Arabian Monetary Agency SAMA (the kingdom’s central bank) has already put in place a strict lending policy to protect borrowers and lenders in particular and the national economy in general.
According to regulations, a bank is not entitled to deduct more than 30 per cent of borrowers’ salaries, regardless of their debts.
According to Al-Eqtisadiah, consumer credit facilities in 2014 hit an all-time high of SAR322.8bn from SAR296.4bn in 2013.
SAMA says the rise in consumer credit facilities is a result of a lower return margin in loans coupled with growing demand by individuals.
Banks extended SAR148bn worth of mortgages to individuals and companies in 2014, up by 31 per cent compared with a year earlier. “Loans for other purposes” accounted for 80.4 per cent or SAR251.6bn of the total value of consumer credit facilities, up by 7.8 per cent.
Loans and facilities given to restore and refurnish buildings and houses amounted to SAR25.6bn or 8.2 per cent of the total, marking an increase of 20.2 per cent year-on-year.
Furthermore, the Saudi banks provided a total of SAR35.9bn to finance individuals and corporations’ purchase of vehicles and transportation equipment.
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