Kuwait Central Bank expects high participation for consumer and installment loans


KUWAIT CITY: The Central Bank of Kuwait has ordered all local banks to start receiving financial transactions related to individual consumer loans, remittances and credit cards through electronic platforms and banking services from Sunday.

The move came after most banking operations were suspended for more than two months due to the novel coronavirus (COVID-19) outbreak that has rendered virtually all of the country’s corporate sector inactive.

The same sources told the daily that banks have started to receive transactions under the new discount rate set at 1.5% by the Central Bank of Kuwait, and expect high customer participation for loans to consumption and installment due to the low interest rate offered. They also said that the return of individual funding indicates a gradual return to normal life in the coming period due to the fact that loans are tied to a large segment of citizens and expatriates and are relatively large in the loan and financing portfolios of local banks. and finance companies.

According to the latest data published on the website of the Central Bank of Kuwait, consumer loans granted to the client for the purpose of financing the purchase of personal and durable goods or spending on education or medical treatment, and paid in monthly installments for a period not exceeding five years, amounted to KD 1.49 billion at the end of last February.

As for simplified loans, these are long-term personal loans granted to citizens to restore or buy private housing, and they are paid in monthly installments over a period not exceeding 15 years. Currently, simplified loans have reached KD 11.98 billion.

At the same time, in light of various fast-track regulatory laws to help banks cope with the repercussions of the coronavirus crisis, the Central Bank is holding in-depth meetings with bank officials on more than one file, including reassessing key positions. debt, added the daily. .

He said the central bank asked each bank to determine the level of cash flow and profitability, the future value of their collateral and the extent of their ability to pay their obligations on time if they were exposed to a set of scenarios. difficult.

It should be with an explanation of whether any of them had ever submitted to their bank a request to postpone debt or reschedule due to the consequences of the coronavirus. Banks had previously decided to postpone by six months the maturities of loans to individuals, small and medium-sized enterprises and establishments affected by the “corona” from last March until next September, without any penalty or fine for delay, relieving the repayment pressure on all customers.

Based on the study prepared by the Senior Steering Committee for Economic Stimulation, headed by Central Bank Governor Dr Muhammad Al-Hashel, the revenues of affected sectors in Kuwait are expected to decline by 15-30%, in shutdown scenarios. for a period of 8 to 12 weeks, since the start of the government shutdown, with varying impacts for each sector, he noted. He reiterated that the rate of decline in global economic activity in the second quarter of 2020 would likely be the most severe since World War II.

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