Banks cannot withhold end of service benefits of Saudis
The Saudi Arabian Monetary Authority, SAMA, made a clear statement recently that the banks do not have the authority to withhold the end of service awards of their Saudi clients until or unless they have a judicial statement allowing them to do so.
The same goes for deducting any amount from their Saudi client’s accounts. Giving briefing on the matter, Talat Hafiz who is the Secretary-General of the Information and Banking Awareness Committee and spokesman of Saudi banks, the banks have no authority to deduct charges from the account of its clients except the monthly installment.
They can deduct charges only if they have taken permission from the client over the matter or have a judicial statement allowing them for doing so. He also made it clear that the banks have no authority to deduct a monthly installment before the date agreed among the bank and the client.
Rights of customers in Banks
Throwing light on the rights of clients, Hafiz made a clear statement that the clients can shift to another bank for the purpose of shifting their monthly salaries unless they have made a financial commitment with the bank over shifting their accounts.
Fadl Al-Buainain, who is the Economic and Banking expert, described the bank’s act of confiscating the end of service award or transferring it directly to another account as a means of settling down a loan owed by the client as a brutal violation of banking services.
Can banks withhold end of service benefits of expatriates?
It has been clearly mentioned above that banks don’t have a right to withhold or reserve end of service benefits of Saudis to settle a loan or any other commitment by a Saudis, a question arises do expatriates also have the same liberty?
While I am not sure about the related provisions of the Saudi Arabian Monetary Agency SAMA in this regard, the general practice lets me believe otherwise. Generally, at the time of awarding a loan to an expatriate, the bank requires companies to inform them in case of resignation or termination of the employee.
This commitment is normally given along with the salary certificate which is one of the most important documents required to award a loan to an expatriate. As soon as the expatriate resigns or terminated, the HR department informs the bank about the latest happening and he freezes the account of the expatriate to settle the loan amount. As a result, once the end of service benefits are transferred, they are taken by the bank.
Source: Saudi Gazette