Default penalty payment for Saudi banks should not exceed 1 instalment, says official

The default penalty payment for financing by banks in Saudi Arabia should not exceed the value of one instalment over the facility tenor, Al Watan newspaper reported, citing Talat Hafiz, Secretary General of the Media and Banking Awareness Committee of Saudi Banks.

According to regulations of retail payments collection, the financing provider is not entitled to impose default payment penalty or collection fees, which are higher than the original due sum, with a maximum of one instalment over the financing facility tenor, he added.

In April 2018, the Saudi Arabian Monetary Authority (SAMA) issued regulations on the retail payments collection, stressing that banks should ensure the full compliance with these regulations, Argaam reported.