By Muhammad Al-Abdullah

Okaz/Saudi Gazette

DAMMAM – The agreement between the Ministry of Commerce and Investment and the Saudi Arabian Monetary Authority (SAMA) is meant to stop the licensing of companies selling commodities on installment, Zeid Al-Yaeesh, Chairman of the General Committee for Financial Companies, an affiliate of SAMA, told Okaz/Saudi Gazette on Monday. The aim is to protect the market by making available the required data on all clients, he pointed out. The Committee aims to restrict the financing process to licensed entities, ensuring compliance with the regulations issued by SAMA, Al-Yaeesh added.

“SAMA aims to limit financing companies in order to combat money laundering, abide by responsible financing, follow appropriate bill collection methods, as well as study the client’s solvency,” he said.

Chaos in the financing market has negative effects on the society and the individual. These include a rise in the percentage of payment defaulters and the danger of money laundering operations, he stressed.

Financing companies can merge into a larger entity and obtain a license for a new company. The fate of companies that do not come under the umbrella of SAMA is that they will be stopped unless they rectify their legal status, Al-Yaeesh asserted (added, warned?).

SAMA’s objective for issuing the financing regulation is to make all companies working in the sector to be under its canopy. The regulation states that 45 percent will be deducted from the employee whose salary exceeds SR15,000, and 55 percent to be deducted from the employee having a salary over SR15,000. The aim is to protect the individual, he stressed.

Al-Yaeesh said some quarters ignore SAMA regulation.

He added that the market is divided into two sections. The first is organized and is subject to SAMA law. This includes financing and lending companies. They provide SAMA with the list of their clients. The second are companies licensed by the Ministry of Commerce and Investment but is not subject to SAMA regulations, like those selling household appliances and cars.

SAMA has uncovered the existence of violators, those providing financing that exceeds the limit with regard to monthly deductions. This exacerbates defaults in payment of due installments.