Saudi Arabia is the only G20 country that has responded to the economic impact of the virus by cutting spending/Bloombergby Kudakwashe Muzoriwa
The Saudi Arabian Monetary Authority (SAMA) has ordered lenders to provide concessional loans to businesses grappling with the fallout of the coronavirus so that companies will not have to cut jobs, according to local newswire, Saudi Press Agency.
The regulator asked banks to immediately put in place a lending programme for at least six months to assist in maintaining employment levels and ensure business continuity as part of a series of the Kingdom’s measures to stem the impact of the COVID-19 outbreak on the private sector.
Furthermore, the central bank said that banks should also provide relief on debt repayments for any customers that have already been dismissed.
SAMA stated that the measures taken include supervisory measures and precautionary policies to counter the impacts of the coronavirus epidemic in order to support banks to help them focus on providing the best banking services to their customers and meet their financing needs in the current circumstances.
Bloomberg reported that the measures will come at a cost to shareholders as banks’ revenue will be put under more pressure by the waivers on fees and some interest charges.
The central bank said that Saudi lenders should support and finance the country’s private sector by taking precautionary measures that are in the interest of the customer, the bank and the economy, whether by adjusting or restructuring the current funds without any additional costs.
Moreover, banks are also required to waive all fees and charges from the use of digital channels for up to six months, including an activation fee for new customers.
SAMA also said that banks should refund customers who may need to cancel travel bookings made on their credit, debit or cards linked to their current accounts (mada) or prepaid option.
Central banks around the world have unveiled emergency stimulus packages as the pandemic forces authorities to restrict international travel and go into full lockdown to slow the spread and prevent it from overwhelming health services.
Saudi Arabia is the only G20 country that has responded to the economic impact of the virus by cutting spending.