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At least a quarter of borrowers in Saudi Arabia have fallen behind on repayments, according to the Saudi Credit Bureau (SIMAH).
The possible bad debt is affecting 200 financing institutions across the Kingdom, 85 in Riyadh alone, said Nabil Al Mubarak, chairman of SIMAH, the Kingdom’s first comprehensive consumer credit bureau, which bases its data on consumer credit information from 10 commercial banks.
Most of these financing institutions are not registered with SIMAH, but they are monitored by the Ministry of Commerce and Industry, Al Mubarak said in Saudi daily, Saudi Gazette.
The volume of consumer credit in Saudi Arabia fell to SR178.9 billion ($47.7 billion) by mid-2008 from SR185.4 billion ($49.5 billion) a year earlier, after Saudi Arabian Monetary Agency (SAMA) restricted consumer credit - reportedly because consumer loans were being used for speculative trading on the stock market.
Al Mubarak said financing institutions not registered with SIMAH and SAMA did not follow SAMA’s financial regulations, including its interest rate.
He did not rule out the possibility of unregistered financial institutions being involved in money laundering operations.