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More citizens complain about high interest rate of loans

Saudi Arabia, May 6, 2018

An increasing number of Saudis have complained about the rising interest rate of loans, Al-Madina daily reported. Talat Hafiz, spokesman for Saudi banks, said the Saudi Arabian Monetary Agency (SAMA) provided solutions and options to citizens such as rescheduling the payments of the loan, transferring the loan to another bank with different but better conditions or re-determining the rate of interest. An official of the Saudi Consumer Society said they are following up the case and the latest developments.

Abdullah Al-Noman, a Saudi, said he applied for a housing loan at a bank and did not know that SIBOR (the interbank lending rate) had changed. The bank official did not bother to tell him, leading to Al-Noman paying a higher interest rate that reached SR1,000, which increased the amount of repayment of the loan. He cannot transfer the loan to another bank, especially in light of the fact that profit margin increases dramatically in this case. He filed a complaint with the SAMA but no action has been taken.

Nora Al-Ghamdi, another Saudi, says the banks never talk about SIBOR when a citizen applies for a loan. Some banks have taken advantage of the fact that some citizens need money to build a house, and they would take a loan at any cost.

Turki Al-Amri, who filed a complaint in the name of a number of citizens who were negatively affected by SIBOR, said the banks did not explain the SIBOR index, whose name differs from one bank to another. After two years of buying the house, they were surprised to see an increase in the monthly installment they pay. When they checked with the bank, they were told that the contracts they signed were subject to SIBOR (check). This means that the total amount of the house will change and might increase; in other words, a house that is bought for one million might reach four million in installments. He said the courts refused to look into the cases because these cases are out of their jurisdiction.

Talat Hafiz said the conditions of the contract state that any change in SIBOR index should be borne by the borrower.

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