Banks in Kuwait started in mid-November to implement the new Central Bank of Kuwait instructions on granting loans and personal finance operations, which raised the cap on consumer loans from 15 times the net monthly salary to 25 times to a maximum of KD 25,000 ($82,500). The new on maintained the maximum limit of the housing loan at KD 70,000 ($231,000). So the total amount that a customer can obtain from loans or Islamic financing is KD 95,000 ($313,000) instead of KD 85,000 ($280,000).
The bank said in a statement published on its website that the instructions took into account changes in indicators of the gross domestic economy (2004-2017). The past years also witnessed significant developments in global monetary policy. Most major economies abandoned their monetary easing policies after the financial crisis and began to raise interest rates on their currencies.
The US Federal Reserve has raised interest rates eight times since 2015, while Kuwait’s central bank raised them only four times in order to stimulate the local economy. While raising interest rates contributes to reducing consumption and stimulating savings, it also leads to a low rate of demand for individuals and companies to borrow, which reduces the volume of credit, including loans for real estate, investment and consumer sectors and securities.
Courtesy: Kuwait Times