Reference is made to the Council of Ministers' resolution No. 551 dated 26^th September, 2016 to cut bonuses, allowances and other financial perks of state employees, including public institutions, authorities and other public legal personalities, and its impact on the repayment of consumer loans for some bank clients. And In order to reduce pressure on borrowers hit by cuts, SAMA has directed domestic lenders to reschedule loans of those affected in accordance with the following instructions and controls:

1. Banks must obtain the client's approval for rescheduling, include the approval in the new contract, and maintain the documents and based on which the client was given the exception to reschedule the loan.
2. Banks must reschedule loans without charging any additional fees or changing the term cost (i.e. the Annual Percentage Rate of the financing amount that has already been agreed upon and signed under the finance contract.)
3. Banks must, when rescheduling a consumer loan, take into account the client's obligations under other financing products and follow internal credit policies and Consumer Protection Principles.
4. Banks must clarify and explain to the client the total profit and any additional amounts that will be due as a result of the term extension, then obtain the client approval.
5. Banks must ensure that the total deductions do not exceed 33.33% of the basic monthly salary (after deducting pension contributions) plus all fixed allowances paid on a monthly basis.
6. Banks must comply with the First Update of the Regulations for Consumer Financing, circulated to banks on 9/9/1435H (7/7/2014). As an exception to the Regulations, it is allowed to:

• reschedule loans (for those affected) without complying with the maximum five-year term of maturity, provided that banks must keep all documents for each exception case, taking into account those whose loan terms will exceed their retirement age.
• reschedule loans without requiring the client to repay (20%) of the loan.

SAMA has emphasized that these instructions are not applicable to new contracts entered into after these instructions; and that banks should give the first installment following the implementation of the aforementioned resolution a top priority in processing. It also has urged banks to inform affected clients of the procedures that will be taken to reschedule loans as well as the steps followed to address arising complaints. In addition, SAMA has instructed banks to proactively encourage any client the income of which has been proven to be affected to present any proof on that through visiting the nearest bank branch. Other financing products will be assessed for further actions.