Saudi Central Bank Moves to Consolidate Finance Company Rules

Key Takeaways

• Clearer Operating Framework: SAMA has updated the Implementing Regulation to better define the requirements for practicing all financing activities.
• Licensing Requirements Updated: Changes include revised aggregate finance limits and updated bank guarantee requirements for license applications.
• Governance Provisions Revised: The regulation updates rules on related-party dealings and clarifies how expired finance company licenses are handled.
• Microfinance Rules Repealed: Separate consumer microfinance rules have been withdrawn and absorbed into the broader regulatory framework.

Deep Dive

The Saudi Central Bank has rolled out an updated Implementing Regulation of the Finance Companies Control Law, sharpening the rules that govern how finance companies operate across the Kingdom and folding several legacy frameworks into a more unified regulatory structure.

The update reflects SAMA’s ongoing effort to modernize supervision of the finance sector while supporting its stability and growth. Rather than introducing an entirely new regime, the changes focus on refining core requirements and removing overlaps that have built up over time.

At the core of the update are revisions to the requirements for practicing financing activities. SAMA has adjusted how aggregate finance amounts offered by finance companies are calculated and updated the bank guarantee requirements that firms must submit when applying for a license. The regulation also revises provisions governing transactions with related parties, an area that remains a recurring focus for financial supervisors globally, and clarifies how cases involving expired finance company licenses should be handled.

The changes are also a structural shift in how microfinance is regulated. SAMA has repealed both the Rules Regulating Consumer Microfinance Companies and the Rules of Engaging in Microfinance Activity, bringing those activities under the broader implementing regulation. At the same time, the Rules of Licensing Finance Support Activities have been amended to align with the updated framework.

The revisions are a move toward clearer, more consolidated oversight. By updating licensing requirements, tightening governance provisions, and eliminating parallel rulebooks, SAMA is aiming to reduce regulatory friction while maintaining firm supervisory expectations for finance companies operating in the Kingdom.

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