Saudi banks tie personal loans to income, credit score on SIMAH: Talaat Hafez

Saudi banks tie personal loans to salaries, personal expenses and credit scores according to the Saudi Credit Bureau (SIMAH), in order to ensure that clients won’t be over-burdened, Al-Madina newspaper reported, citing Talaat Hafez, secretary-general of the Media and Banking Awareness Committee of Saudi Banks.

In average, banks deduct 33 percent of employed clients’ salaries to pay for the loan installments, while 25 percent is deducted from retired clients.

Saudi Arabian Monetary Authority’s (SAMA) guidelines urge banks to fully support loans needed to fund basic needs such as housing, health and education.

Banks are asked to grant fewer loans needed for travel and consumer goods, he said.

The default rate is no more than 1-1.5 percent of the total personal loans of SAR 316 billion in Q1 2018, accounting for 14 percent of the Kingdom’s gross domestic product (GDP), he added.