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that surfaced during this period were skillfully resolved by the authorities using various supervisory tools and techniques.

A Strong Supervisory Framework. Since its creation in 1952 and the promulgation of the Banking Control Law in 1966, SAMA has enjoyed broad regulatory powers of licensing banks, approving their activities and taking prompt corrective action when required. SAMA is impowered to make rules, regulations and guidelines for banks in all areas including capital adequacy, liquidity, lending limits, credit and market risk, etc. Also, it has powers to conduct both on-site and off-site supervision. Until the recently announced Capital Market Law, SAMA also acted as the regulator of the stock market and operated the electronic stock exchange. Also, SAMA has a dual role of providing central payment and settlement services and for the oversight of these systems. Over the years, SAMA has used its broad supervisory powers effectively to ensure that the Saudi Banking System continues to enjoy reputation for soundness and stability in the international financial markets. Looking ahead, systemic stability for the financial markets and the banking system will continue to be a major goal of Saudi authorities.

The recent promulgation of the Insurance Law will further expand SAMA’s supervisory role in an other important sector of the financial market. It will be both a licensing and a supervisory authority with power to ensure that only well capitalised companies with technically competent and well qualified management offer such services. SAMA will further ensure that adequate standards of corporate governance, market dicipline and transparency are put in place to guarantee a high degree of consumer and investor protection in this sector.

SAMA has been an active player in the international banking supervisory world and has benefited greatly from its participation in several international fora. SAMA has been a founding member of the Banking Supervision Committee of the Gulf Cooperation Countries. This committee has a mandate to promote standardization of supervisory practices in member countries with a view to develop a framework for unified banking and financial system. It is also a member of the Arab Banking Supervision Committee which promotes stronger standards in the Arab countries. SAMA also participates in several sub- committees of the Basel Committee on Banking Supervision, particularly the Core Principles Liaison Group, which helped develop the Basel Core Principle for Effective Banking Supervision; it is also a member of the Working Group on the New Capital Accord. SAMA also participates in the Basel Committee’s Accounting Task Force meant to develop international accounting standards for banks. Another important international forum has been the Financial Action Task Force of which SAMA has been a member since the early 90s and has been actively participating in its main activities. Finally in November 2002, SAMA became a founding member of the Islamic Financial Services Board (IFSB) that was created to develop inter alia supervisory standards for Islamic financial institutions.

In addition, SAMA actively participates in various projects, studies, surveys and work conducted by the IMF and the World Bank and other multilateral institutions in the

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