In a strategic move aimed at easing the financial burden on citizens and residents and enhancing the attractiveness of the banking sector, the Saudi Central Bank (SAMA) has issued an updated and comprehensive guide to fees for financial institutions' services. The guide includes significant changes compared to previous fees, most notably a 50% reduction in the maximum administrative fees for personal loans, lowering the maximum limit from SAR 5,000 to SAR 2,500.
Details of reduced financing costs and administrative fees
According to the latest updates, financing products (excluding mortgages) have undergone a significant overhaul to benefit borrowers. Administrative fees have been reduced to 0.5% of the loan amount or SAR 2,500, whichever is lower, instead of the previous rate of 1% or SAR 5,000. This decision reflects a clear trend towards reducing borrowing costs, making it easier for individuals to obtain the financing they need for their personal and consumer needs at reasonable rates.
Card fees and banking transaction updates
The changes weren't limited to financing; they also included the most frequently used daily services. The fee for reissuing a Mada card in cases of loss, damage, or incorrect PIN was reduced from 30 riyals to just 10 riyals. For international transactions, purchase fees were set at 2%, and international cash withdrawal fees were capped at a maximum of 3%, with a limit of 25 riyals. The fee for erroneous transaction disputes was also set at 15 riyals, ensuring that disputes are handled seriously without compromising customer rights.
Money transfers and checks: Towards enhancing digital transactions
The new amendments have encouraged the shift towards digital channels and facilitated traditional transactions. For example, the fee for issuing or canceling a bank check has been reduced to 5 riyals from 10 riyals. Regarding remittances, the fee for establishing standing orders through branches has been reduced from 15 riyals to 5 riyals, with cancellation being free of charge. As for local electronic transfers (Sari), the fee has been set at 0.5 riyals for amounts not exceeding 2,500 riyals, and 1 riyal for amounts between 2,500 and 20,000 riyals, thus enhancing the efficiency and speed of cash circulation in the local economy.
The economic context and SAMA's role in consumer protection
These steps are part of the Saudi Central Bank's regulatory and legislative role to ensure fair financial transactions and protect customer rights, in line with the principles of protecting bank customers. These amendments are part of SAMA's ongoing efforts to keep pace with developments in the global financial sector, as reducing fees contributes to increased competition among local banks to offer better services at lower prices, rather than relying on high fees as a primary source of revenue.
Expected impact on the financial sector and Vision 2030
This decision aligns with the objectives of the Financial Sector Development Program, one of the programs under the Kingdom's Vision 2030, which aims to enable financial planning and enhance financial inclusion. By reducing the costs of basic services and making documents and account statements available electronically free of charge, the Central Bank is accelerating digital transformation and reducing reliance on cash and traditional branches, thereby increasing operational efficiency and lowering long-term costs for the national economy as a whole. It should be noted that these amendments will take effect within 60 days of their publication, and delivery costs are not included in the fees.
