Recently, the Saudi Arabian Monetary Authority declared that it had set a minimum capital limit for small finance businesses. According to the announcement, the Central Bank of Saudi Arabia set a minimum paid capital for the small finance firms at 20 million riyals. The amount will become high or low as per the market conditions. It is also announced that these small finance companies can also provide consumer loans over 50,000 riyals.
SAMA is issuing this rule intending to uplift the financial inclusion by offering financial products according to the needs of the consumer. The Central Bank of Saudi Arabia is increasing the financial stability and assisting in the economic growth and development to achieve the goals in the Kingdom’s vision 2030.
The motive of Vision 2030 is to develop several job opportunities for the citizens by encouraging entrepreneurship of SMEs, privatization, and investment in new companies. The Kingdom is supporting young entrepreneurs by offering business-friendly rules, funding, international partnerships, a share of the national procurement as well as government bids.
SAMA also said that they released this rule to attract many investors and companies to work in this sector under its supervision. The companies will have to provide specific financial products to meet consumer requirements and a framework for consumer protection. As per the Vision 2030, Saudi Arabia is targeting raising the SMEs’ contribution to 35% of GDP from 20% at the time of plan launch in 2016.