Banks will have to provide easy loan terms to businesses to help them out of the COVID-19 quagmire. Image Credit: Reuters

Riyadh: Saudi Arabia’s central bank is ordering lenders to provide concessional loans to businesses grappling with the fallout of the coronavirus so companies won’t have to cut jobs.

The Saudi Arabian Monetary Authority wants banks to immediately put in place a lending programme for at least six months to “assist in maintaining employment levels,” according to a document sent by the regulator. Banks should also provide relief on debt repayments for any customers that have already been dismissed, SAMA, as the central bank is known, said.

The measures “will come at a cost to shareholders as banks’ revenue will be put under more pressure by the waivers on fees and some interest charges,” Bloomberg Intelligence analyst Edmond Christou said in a note.

SAMA also unveiled a 50 billion riyal ($13.3 billion) programme to help private businesses in the kingdom that’s also dealing with a crash in oil prices.

SAMA also postponed the implementation of outstanding Basel III standards to help banks respond to the coronavirus crisis.

Saudi Arabia is the only G20 country that has responded to the economic impact of the virus by cutting spending.