New rules on bank lend­ing

Arab Times - - FRONT PAGE -

KUWAIT CITY, Nov 10, (KUNA): The Cen­tral Bank of Kuwait (CBK) on Satur­day is­sued new reg­u­la­tions for grant­ing loans and per­sonal fi­nance for con­sumer and hous­ing pur­poses and is­suance of credit cards.

CBK Gov­er­nor Dr Mo­ham­mad Al-Hashil told Kuwait News Agency (KUNA) that the new in­struc­tions came within the frame­work of the Cen­tral Bank’s in­ter­est in reg­u­larly re­view­ing its in­struc­tions and reg­u­la­tory con­trols in light of eco­nomic and bank­ing de­vel­op­ments.

In this re­gard, the Bank, in co­op­er­a­tion with one of the global con­sult­ing com­pa­nies, re­viewed the in­struc­tions is­sued on the mech­a­nisms of grant­ing loans and other fi­nanc­ing op­er­a­tions.

He added that the study took into ac­count changes in macroe­co­nomic per­for­mance in­di­ca­tors since the last ad­just­ment to the max­i­mum lim­its of these loans in 2004, in­clud­ing changes in pop­u­la­tion growth rates, in­fla­tion rates and ris­ing prices of con­sumer and durable goods.

The in­crease in wages and salaries was also re­flected in the in­crease in salaries in light of the loans’ con­nec­tion to a large seg­ment of cit­i­zens and res­i­dents, and their rel­a­tive im­por­tance in the lend­ing and fi­nanc­ing port­fo­lios of both banks and fi­nance com­pa­nies, with the im­por­tance of con­trol­ling growth in these loans to main­tain mone­tary and fi­nan­cial sta­bil­ity.

He added that based on the find­ings of the study and tests of the ap­pli­ca­tion of al­ter­na­tives and the most im­por­tant ob­ser­va­tions re­vealed by the Cen­tral Bank of Kuwait to prac­tice the grant­ing of this type of loans and fi­nanc­ing op­er­a­tions, the Bank is­sued new in­struc­tions for grant­ing loans and per­sonal fi­nanc­ing for con­sumer and hous­ing pur­poses and the is­suance of credit cards.

The new reg­u­la­tions aim at

reg­u­lat­ing the grant­ing of loans by banks, in­vest­ment and fi­nanc­ing com­pa­nies based on the ac­tual needs of cus­tomers and aimed at re­duc­ing the ex­ces­sive use of these loans in the frame­work of strength­en­ing the prin­ci­ple of flex­i­bil­ity and bal­ance in a way that pre­serves the rights of the two par­ties.

He pointed out that these in­struc­tions in­cluded in­creas­ing the max­i­mum amount of loans and Is­lamic fi­nanc­ing op­er­a­tions for con­sumer pur­poses to be­come an in­de­pen­dent limit not ex­ceed­ing 25 times the net monthly salary of the client and a max­i­mum of KD 25,000 (about $82,000).

He con­cluded that in terms of loans and Is­lamic fi­nanc­ing op­er­a­tions for hous­ing pur­poses, the max­i­mum limit re­mained KD 70,000 (about $231,000). Thus, the to­tal amount that can be ob­tained by the cus­tomer from loans and Is­lamic fi­nanc­ing is KD 95,000 (about $313,000) once ad­her­ing to other reg­u­la­tions.

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