CBK allows loan restructuring, raises deduction limit to 50% for existing borrowers

The Central Bank of Kuwait (CBK) has approved new measures allowing banks and financing companies to restructure personal loans — whether for consumer or housing purposes — based on the borrower’s updated financial circumstances.

Under the revised framework, the maximum monthly installment deduction from the salary of an employed borrower has been increased from 40% to 50%.

This adjustment enables clients whose salaries have been reduced to lower their monthly payments in exchange for a longer repayment period.

According to the sources, the restructuring option applies only to existing borrowers who have experienced a change in their financial condition — such as a salary reduction — that causes their installment-to-salary ratio to exceed the previously allowed limit. This relief will not be extended to new loan applicants.

The CBK now permits financing providers, upon the borrower’s request, to extend the loan term beyond the original duration specified in current regulations. This measure is aimed at easing financial pressure while maintaining regulatory oversight, with the stipulation that monthly deductions remain below 50% of the borrower’s new net salary.

This move is expected to support financial stability and ease burdens on customers impacted by changes in employment or income levels, while preserving the health of the banking sector.