KUWAIT, Nov. 11 (KUNA) – The Central Bank of Kuwait has approached the Ministry of Trade and Industry to inform them of new lending regulations to prevent an unwarranted rise in commodity prices and services.
CBK Deputy Governor Yousef Al-Obaid said in a statement to KUNA on Sunday that the central bank is paying special attention to consumer and installment loans, as they affect a large segment of the population.
These loans also concern key economic sectors, namely banks, finance and investment companies, it is therefore necessary to review these guidelines and regulations in the light of the evolution of macroeconomic indices.
The new CBK instructions were released, taking into account several factors such as the need to refrain from stimulating consumption trends among citizen borrowers, encouraging them to save and invest in safe areas, Al said. -Obaid.
Explaining further, he says that the monthly repayment installment for borrowers should not exceed 40 percent of the payment for employees and 30 percent for retirees, therefore, only those with high salaries will benefit from the increase in loans.
For his part, Waleed Al-Awadhi, executive director of the supervision sector of the CBK, says the new guidelines are in part aimed at protecting clients’ rights and relieving them of heavy financial responsibilities.
Average monthly payments for Kuwaitis increased by 12% between 2004 and 2017, but inflation increased by 67% during the same period, a product worth 15,000 KD (around 5,000 USD) in 2004 was valued at over 25,000 KD (around 5,000 USD) 8,000 USD) in 2017, he explained.
The consumer loan can be 25 times higher than the customer’s monthly payment, with a maximum limit of 25,000 KD (82,000 USD) to be repaid in five years. The maximum ceiling for the home loan is 70,000 KD (231,000 USD), repayable over 15 years. The money has to be spent for the renovation, the construction, the purchase of a private house.
The CBK interviewed the data of 739,450 clients, including 429,000 borrowers. The average consumer credit amounted to 3.6 thousand KD (approximately 11,000 USD). The average monthly payment has been estimated at KD 1,100 (approximately USD 3,000).
The loan portfolio in Kuwait increased by 14% from KD 1 billion in 2000 to KD 12 billion in 2017.
The loan regulations recently introduced by the CBK are due to go into effect on Wednesday. (end) fnk.rk