Saudi bank loan defaults fall to $45.5bn in first half of 2013

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Stalled loans in Saudi banks have decreased to SR16.7 billion during the first half of this year compared to SR20.4 billion during the same period last year, Okaz Arabic daily reported Saturday.

An economic study on stalled loans and the effect on banks have shown that the stalled loans in the Saudi Investment Bank have decreased from SR1.7 billion to SR345 million only. Al-Jazirah, Inma and Al-Fransi banks were more affected.

Nonetheless, citizens who have stalled in payment of bank loans criticized the way some banks deal with them in demanding settlement of loans in case of delay in payment due to circumstances.

They said when offering the loans the advantages appear and the conditions and fines are hidden. The client will not be aware of these if he does not ask about them. The matter will appear to be easy, but it turns into a nightmare when the bank starts demanding payment of the installments or the borrower delays payment. The bank employees’ smiles change to frowning.

They demand payment through several methods, including provoking the client if negotiations fail to reach a solution that satisfies the bank, Al-Madina Arabic daily reported Saturday.

Othman Al-Qurashi, one of the defaulters in payment of his loan due to circumstances concerning his retirement, said the method the bank resorts to is continuous threats to resort to legal measures without any consideration for the client’s circumstances.

Al-Qurashi further said his current circumstances make it impossible for him to pay back the loan after retirement, but the bank is demanding the same installments they agreed on before retirement besides the amounts on the credit card. He said he has paid a larger amount than the loan he had taken and the bank is still demanding interest. He said the bank does not inform the client about the consequences before issuance of the credit card.

Meanwhile, Khaled Shayea, a bank client whose payments have stalled expressed discontent. He said the bank bill collectors have telephoned almost all of his relatives and family members. They kept on sending faxes to his place of work demanding payment. The bank has not shown him the method of payment that will suit his current circumstances except recently. This has caused him a lot of embarrassment.

The manager of the bill collection administration in one of the big banks, who requested anonymity, said the bank tries to get its dues which actually belong to the shareholders of the bank. He said filing a lawsuit and taking into consideration humanitarian reasons do not conform with the bank’s rights that have to be collected. — SG

This article was first published in the Saudi Gazette, on August 26, 2013.

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