Banks in Kuwait tighten grip on risky accounts affected by biometric ‘block’

• Banks continue to deduct loan installments, allow deposits, and clear defaulter records, with most non-Kuwaiti clients without biometric fingerprints posing low risk due to limited borrowing.

• Installments will continue to be deducted from frozen accounts, deposits, including salaries, can still be made, but withdrawals remain blocked, with most non-biometrically signed individuals not listed as depositors.

By the end of Tuesday, December 31, 2024, the deadline for non-Kuwaiti residents to complete biometric fingerprinting expired. According to statistics from the General Department of Criminal Evidence, approximately 224,000 residents, 88,600 stateless individuals ‘Bedoon’, and 16,000 citizens had yet to submit their fingerprints, as reported by Al Rai newspaper.

Considering that non-Kuwaiti residents without biometric signatures have had a “block” placed on their transactions with all official entities, including bank accounts, starting last Wednesday morning, bank officials began reviewing the records of this group to determine their classification. The main question now is: who are these non-biometrically signed individuals, and what is the size of their balances and loans?

Halting dealings for non-biometrically signed individuals

Although the New Year’s holiday coincided with the activation of the decision to halt dealings for non-biometrically signed individuals, some bank officials took the initiative before the deadline to prepare detailed statistics for non-Kuwaiti customers. This effort aimed to determine their banking profiles and limit credit risks, assessing whether they are borrowing customers or not, and if they own businesses, in which credit category they fall.

In this context, responsible banking sources revealed to Al-Rai newspaper that a preliminary study conducted by some banks found that the majority of non-Kuwaitis without biometric fingerprints are males, making up about 75% of the group, while female customers represent about a quarter. Additionally, around 80% of them are classified with small to medium salaries, and they are most likely to have employment-related accounts.

Suspending dormant accounts

The sources pointed out that the initial banking inventory showed that the accounts of some non-Kuwaitis without biometric fingerprints were dormant, meaning they were suspended due to no banking transactions within the past six months. This is the period specified by the Central Bank of Kuwait for suspending dormant accounts, which can only be reactivated upon the request and personal presence of the customer.

The sources noted that a large segment of the accounts frozen as of January 1, due to their owners not completing the biometric fingerprinting process, continue to receive salary deposits regularly without interruption.

However, according to regulatory instructions, a “block” has been placed on their banking transactions, preventing them from withdrawing from their balances, including salaries deposited as per the decision, or even adjusting their status.

Non-Kuwaiti clients without biometrics show low borrowing rates

In terms of credit, the sources reported that the majority of non-Kuwaiti clients without biometric fingerprints are not registered as borrowers.

About 15% of them have facilities classified under small loans or credit cards, suggesting that the risks to banks from non-biometrically signed individuals are low. This implies that, from an accounting perspective, there is no need to build precautionary provisions against the possibility of default in this portfolio.

Account freezes don’t stop deductions but block withdrawals

The sources indicated that installments due from customers whose accounts were frozen during the restriction period will continue to be deducted in favor of creditors, whether financing entities or government obligations, if any. They noted that amounts, including salaries, can still be deposited in these accounts according to banking practices. However, withdrawals from these balances will remain frozen in all their usual forms.

Regarding their bank deposit portfolios, the sources mentioned that the vast majority of those without biometric signatures, if not all, are not listed as depositors. There are no amounts in their balances exceeding the salary range, except in a few limited cases and at relatively low rates.

Warning sent as banks start freezing accounts of biometric defaulters

The sources stated that, in accordance with regulatory instructions, the bank sent warning messages to all concerned customers before the deadline for completing the biometric fingerprinting, urging them to do so within the specified period.

They noted that the procedures for restricting the bank accounts of defaulters were gradually implemented, starting with the suspension of all electronic channels and payment methods, including stopping the display of account balances, obtaining account statements, and transferring funds between accounts, effectively halting online access to balances.

In a later step, all bank cards of the defaulting customers were biometrically deactivated, resulting in a complete “block” on all their accounts by the end of the specified period.

Who are the non-signatories?

• 25% are women.
• 15% are borrowers.
• 80% have small and medium salaries.
• The list includes clients who have been issued credit cards.
• They are not included in the lists of depositors.
• They are outside the records of those with large balances.
• The salaries of a large segment are regular deposits.
• Their classification does not require precautionary allocations.

76% of required individuals complete biometric fingerprinting before deadline

According to official data released before the end of the deadline (last Tuesday), about 76% of those required to undergo biometric fingerprinting have completed the procedure. The distribution is as follows:

• 960,000 citizens have fingerprinted, with 16,244 remaining and 2.724 million residents have fingerprinted, with 224,000 having defaulted.
• While 58,000 ‘Bidoon’ have fingerprinted, with 88,604 having defaulted, 13,241 bedridden individuals and people with special needs have completed the fingerprinting.