Charts & Numbers

The Central Bank of Kuwait announced it is reducing the cap on consumer loans to 40%, from 50%. The new rule will allow retail banks to lend upto 40% of a customer’s salary.  Also introduced is a plan for pensioners’ loans cap at 30% of their income. The Central Bank also decided that it will limit interest rates to 3% above discount rate, rather than 4%. These steps are aimed at reducing the money supply in the market. It is believed that these steps are in an attempt to lower inflation in Kuwait, which is at record highs.

The new Central Bank decisions will effect retail banks by decreasing the amounts that could be lent to consumers while lowering returns on the loans given. The impact of the new regulations on the local banks will be decreased profits in the future and, along with the lawsuits, maybe even losses before end of year.

• Consumer loans cap will be 40% of salary, from 50%
• Pensioners loans’ cap to 30% of income
• A new limit on interest rates of 3% over discount rate, from 4%
• Kuwaiti’s owe more than KD 4 billion in personal loans
• These rules do not apply to foreign banks