(Adds banks' talks with central bank, deputy governor's
RIYADH, Sept 29 Saudi Arabia's central bank has
asked local banks to reschedule consumer loans after the
government cut bonuses and other financial perks for public
sector workers, local media reported on Thursday.
The cabinet announced this week that it would slash
ministers' salaries by 20 percent and reduce a range of
allowances for public employees to help curb a huge budget
deficit caused by low oil prices.
Allowances account for as much as 30 percent of many Saudis'
income, so the measures may have a significant impact on
consumer spending. In addition, the government said it would
base salary payments on the Western calendar rather than the
Islamic calendar; since the latter is about 11 days shorter,
this is expected to reduce income further.
"The Saudi Arabian Monetary Agency (SAMA) has obliged local
banks to reschedule consumer loans for employees whose salaries
went down after the cancellation of a number of allowances and
bonuses," Okaz newspaper said without naming its sources.
Central bank officials were not available to comment on the
Under banking rules, monthly installments on consumer loans
in Saudi Arabia must not exceed a third of a borrower's total
salary. Outstanding consumer loans totalled 343 billion riyals
($91.5 billion) at the end of June, central bank data shows.
The Maaal financial website quoted central bank vice
governor Abdulaziz al-Furaih as saying: "There is an ongoing
discussion with banks to study this issue...SAMA is working on
maintaining banks' rights as lenders while mitigating the impact
on borrowers affected by the decision."
He added, "No specific mechanism has been agreed upon so far
and the final picture could be clear by the end of this week or
Maaal reported that banks were negotiating with the central
bank to be allowed to deduct up to 40 percent of customers'
salary payments to service their consumer loans, instead of the
33 percent currently permitted.
If the central bank declines to increase the deduction,
banks will discuss raising interest rates on the loans, it said.
(Reporting by Marwa Rashad; Editing by Andrew Torchia)