In a news item published on Jan. 13, Al-Riyadh newspaper quoted reports by the Saudi Arabian Monetary Agency (SAMA) that said the accumulative debts on citizens to the banks resulting from personal consumer loans and credit cards have risen to very high levels. The reports said the consumer debts reached SR246.9 billion in the first quarter of 2012, an increase of 19 percent over the same period the previous year. According to an economist, the consumer loans represented about 84 percent of the banks' portfolios. To me, this ratio means we are not only a consumer people but extravagant as well. We do not know saving. The Saudi citizen does not confine his/her consumer spending to the limits and boundaries of his/her income let alone saving part of this income to the future when he or she retires and the monthly salary becomes much less. Saudis not only exceed their income on consumer spending and extravagance but also resort to borrowing to cover up the gap. They will become chained by the loans that will increase rapidly due to the high interest and inflation rates. In most cases the Saudi citizen will not be able to pay his debts and he will end up in jail. The banks, on their part, will find a tool for quick and safe profits in the Saudi citizen who transfers his salary to them. The banks will start inducing this Saudi through offers of easy loans and credit cards that are issued within a few hours of making a request. On the same day the newspaper published an advertisement from one of the banks publicizing some of its financing and credit programs, including granting personal finances and credit cards to Saudis. The victim here is not only the citizen but also the SMEs that do not find any response from the banks when they apply for loans, not for consumption but for commercial and industrial projects. The SAMA should intervene to put a ceiling on personal loans that should not exceed 25 percent of the total volume of loans extended by banks. I am not mentioning here the installment companies that are mushrooming all over the Kingdom. This is, however, another issue that we may not find a respite from.
