Late payment of the loan at stake – ARAB TIMES
CBK expects growth this year
KUWAIT CITY, April 5 (Branches): Local bank finance officials have opened intensive lines of communication with the Central Bank of Kuwait (CBK) to get answers to many questions; Most important is whether the postponement of collection of down payments for loans begins in April or next month, in addition to the mechanism for triage of customers who wish to postpone payments, Al-Rai reports citing banking industry sources daily.
Sources claimed that banks “continue to deduct installment payments until the deferral law is published in the Official Gazette and they are working on activating the service to automatically determine who among customers wants a postponement or not by contacting the customer service centers. ” So far, the law covers around 500,000 clients; assuming everyone wants to defer payments.
Official data shows that the total value of the personal loan portfolio, including consumer and installment loans, is approximately KD 17.248 billion at the end of January. Excluding expatriates and Bedouns whose number is estimated at 15 percent of the total number of borrowers, the total amount of citizen loans is estimated at KD 14.5 million.
In the same vein, banks have yet to clarify their position on the payments of retirees whose salaries are transferred to the accounts of the latter every 10 days of the month. This is where the problem lies because the down payments will automatically be deducted from the accounts of retirees if the law is not published in the Official Gazette before the 10th of the month. Banks are increasingly concerned that the law will be published in the official gazette at a later date and that the collection of down payments will be postponed from the April salary.
However, for retirees, the banks will then have to return the deposits taken from the retirees’ accounts; otherwise, they have to work with two time dimensions to start postponing down payments, which contravenes the law setting the start and end period of its implementation. Kuwait Central Bank Governor Dr Mohammad Al-Hashel expects the country to experience “positive growth” in 2021, but admitted it “will take time” to return to pre-pandemic levels . “Encouragingly, the first monetary, prudential and fiscal policy interventions since the outbreak of the pandemic have ensured that the country’s production capacity remains unscathed, offering hope for a rapid recovery once the pandemic is under control” , he told the Banker in an interview. Although the economy is hampered by lockdowns and the recent drop in oil prices, especially in the first half of 2020, the government-led vaccination campaign, currently underway, has “improved public sentiment and the outlook. enlightened economics, ”Al-Hashel added.
Nationally, contact-intensive businesses are “adapting,” he said. This is demonstrated by the rise in online sales, restaurants being an example. The recovery in oil prices, reaching their highest level in over a year, also bodes well for the growth of Kuwait’s oil and non-oil gross domestic product, he said. With regard to the monetary policy measures taken to deal with the crisis, cbk implemented a “range of support measures”, namely a cumulative reduction of its key rate of 1.25% in March 2020, from 2.75% to 1.5%. “This decision alone has seen our interest rates drop to record levels, which has significantly alleviated financing conditions and the debt service burden for borrowers of all types,” he said. The CBK also “partially relaxed a series of prudential regulations to ease any liquidity constraints and allow banks to continue to play their role of financial intermediaries.”