CBK expects strong take-up in consumer installment loans – ARAB TIMES


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New low interest rate set at 1.5%

KUWAIT CITY, May 6: The Central Bank of Kuwait has ordered all local banks to start receiving financial transactions related to individual consumer loans, installments and credit cards through electronic platforms and remote banking services from Sunday.

The decision came after most banking operations were suspended for more than two months due to the novel coronavirus pandemic (COVID-19) outbreak which rendered almost the entire business sector in the country inactive.

The same sources told the daily that banks have started receiving transactions at the new discount rate set at 1.5% by the Central Bank of Kuwait, and expect a large influx of customers for loans at consumer and installment due to the low interest rate offered. They also said that the return of individual financing indicates a gradual return to normal life in the coming period due to the fact that loans are linked 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 customer for the purpose of financing the purchase of personal needs and durable goods or expenses for education or medical treatment, and paid monthly for a period not exceeding five years, amounted to 1.49 billion KD 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 for a period not exceeding 15 years. Currently, simplified loans have reached KD 11.98 billion.

Meanwhile, in light of various expedited regulatory laws to help banks deal with the repercussions of the coronavirus crisis, the Central Bank is holding lengthy meetings with banking officials on more than one file, including the reassessment of major debt positions, the daily added. .

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

This should be with an explanation as to whether any of them had ever submitted a request to their bank to defer debt installments or reschedule due to the consequences of the coronavirus. The banks had previously decided to postpone the maturities of loans to individuals, small and medium-sized enterprises and establishments affected by the “corona” by six months from last March until next September, without any penalties or late fines, relieving pressure from the refund on all customers.

Based on the study prepared by the Higher Steering Committee for Economic Recovery, headed by Central Bank Governor Dr. Muhammad Al-Hashel, revenues from the affected sectors in Kuwait are expected to decline by 15 to 30 percent, depending on the scenarios of the shutdown 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 will likely be the most severe since World War II.


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