In cooperation with the Monetary Agency and the Council of Saudi Chambers
Asharqia Chamber is organizing a workshop on licensing requirements and the new regulation of financing companies
The Asharqia Chamber, represented by the Financial Committee, in cooperation with the Saudi Arabian Monetary Agency, and the Council of Saudi Chambers, organized a remote workshop yesterday, Wednesday, October 7, 2020, on licensing requirements and new regulation mechanisms related to financing companies, during which the speakers confirmed that the number of financing companies licensed in The Kingdom has reached about (40) licensed companies, divided between (7) companies for financing and real estate refinancing, (32) companies other than real estate financing, and one company with microfinance.
The speakers reviewed the historical sequence of organizing financing activities in the Kingdom, starting with the installment sale system, the approval of the finance company control system, and the real estate finance system, explaining the reasons for the abolition of the installment sale system, including what the installment sale system created from a large discrepancy between requirements. Regulatory activities and activities falling within the concept of financing activities, as well as the negative practices that resulted under the cover of the installment sale activity, in addition to those risks resulting from the practitioners of financing activities; Unlicensed practitioners follow any procedures to ascertain the source of funds or the quality of the owners of capital and not provide them to any regulatory authority with a report on financial transactions or procedures followed or disclosure of the quality of clients and a statement of risks.
They indicated that the abolition of the installment sale system was aimed at regulating the financing market and practicing financing activities, avoiding that disparity in the regulatory requirements for activities that fall within the concept of financing, protecting the financial system, regulating fair and responsible lending behavior, limiting wrong and unfair dealings, and protecting consumers.
They touched upon the most prominent measures taken by the Saudi Monetary Agency, following the abolition of the installment sale system, such as cooperating with relevant authorities regarding awareness and controlling violators and regulating provisions for a person with a natural or moral character to practice financing the goods of his facilities or services for his customers, and the institution has also established an experimental environment. Legislative aiming to understand the impact of new technologies on the financial services market and assess that impact, as well as help transform the Saudi market into a smart financial center, as that environment welcomed the entry of local and international companies wishing to choose new digital solutions in an actual environment with a view to launching them in the future in the Kingdom in line with With the vision of the Kingdom 2030 AD, as this environment aims to promote economic growth, financing activities and payment solutions.
And finally, the issuance of rules for organizing consumer microfinance companies, the most prominent of which are: First, capital; It stipulates that the capital of the company that practices the activity of consumer microfinance shall be twenty million riyals and ten million for those that carry out the activity through financial technology, and secondly, the corporate governance. It referred to the rules on the issue of governance to what the institution issued later and set some requirements related to the internal governance rules for the company.
