Dubai/London: Saudi Arabia’s central bank is easing rules that limit how much commercial banks can lend as growth slows in the largest Arab economy, according to two people with knowledge of the matter.
The Saudi Arabian Monetary Agency contacted commercial banks to inform them that the amount they can lend as a portion of deposits has been raised to 90 per cent from 85 per cent, the people said, asking not to be identified as the information is private. The move was in response to a request by the country’s treasurers committee to help ease liquidity constraints, one of the people said.
A drop in the price of oil — Saudi Arabia’s principal source of revenue — is leading the government to tap local banks for funding, trim spending and withdrawing government deposits. The three-month Saudi Arabia Interbank rate rose to 1.73 per cent on February 3, its highest in about seven years, according to data compiled by Bloomberg. Calls and e-mails sent to SAMA after office hours in Riyadh weren’t immediately returned.