Unnecessary intrusion may hamper productivity, says minister RIYADH: Saudi finance minister on Tuesday stressed the need to smartly regulate non-bank financial institutions without hampering their productivity and innovation. Mohammed Al-Jadaan was speaking at a panel during the World Economic Forum in Davos, Switzerland. “We need to make sure that we smartly regulate them (non-bank financial institutions), but we should not go beyond that by intruding on their business because that could potentially jeopardize productivity and innovation and deprive credits going to industries,” he said. Al-Jadaan laid emphasis on crafting smart regulations for such institutions to avoid scuttling their growth. He added: “Regulating this industry smartly is necessary to avoid systemic risks and to maintain financial stability. But that is the limit, and beyond that, they are required to comply with the principles.” According to Al-Jadaan, authorities should not formulate regulatory frameworks for non-banking financial institutions similar to banks, as such a move could bring negative results. “We need to be very careful not to apply a regulatory framework that applies to banks to non-bank financial institutions. Because that could potentially kill innovations and deprive investments,” he noted. The minister further pointed out that the technological revolution in the finance sector is expected to bring more offerings for credits in the coming years. “With the evolution of fintech over the last 10-15 years, we should be expecting significantly different products, different choices, different risks and different investors,” he continued. He underscored that governments play a vital role in enhancing awareness and influencing investment decisions. Al-Jadaan also addressed the global role of central banks in safeguarding investors. “If you are a bank taking deposits, the owners of the bank are not at the table or boardroom when you make decisions. And this is why, central banks play that role. They play the role of the owner to protect depositors,” the minister said. When discussing the vitality of non-banking financial institutions, he added: “Obviously, it is all about credit. At the end of the day, it is just being able to provide credit faster and cheaper.”