Central Bank moves to shield businesses as war pressures mount
- Kuwait banks told to ease burden on war-hit companies
- Credit relief unveiled, installment deferrals approved for affected businesses
- To qualify, borrowers must demonstrate their operations have been adversely affected
In a proactive supervisory move, the Central Bank of Kuwait has instructed local banks and finance companies to adopt a flexible approach toward customers whose businesses have been impacted by ongoing geopolitical developments in the region.
The directive encourages lenders to offer support measures, including the postponement of loan installments for eligible business owners and companies.
To qualify, borrowers must demonstrate that their operations have been adversely affected, in line with approved regulatory criteria.
The Central Bank clarified that any such arrangements must fall within the credit policies established by each financial institution, ensuring that relief efforts remain aligned with prudent risk management frameworks.
The initiative forms part of a broader package of measures introduced on March 26 to counter the economic fallout of regional tensions.
These include supervisory guidelines and macroprudential tools, particularly targeting liquidity requirements and capital adequacy ratios, aimed at safeguarding the resilience of the banking sector.
Banks and finance companies have also been instructed to properly document customer consent for any deferred payment arrangements, including a clear assessment of the financial implications.
Additionally, lenders must update relevant credit data through the Kuwait Credit Information Network Company (Ci-Net).
Each institution will independently determine the scope of installment deferrals for affected clients, with disclosures to be reflected in audited financial statements for the period ending June 30.
According to informed sources, the policy signals a shift toward more accommodating credit practices for businesses facing disruptions linked to the war.
Notably, the deferral period is expected to be excluded from the maximum repayment tenure for eligible borrowers.
However, the relief does not extend to loans already subject to legal action or those deemed fully due prior to the implementation of the directive due to payment defaults.
Sources further indicated that the easing measures are currently limited to business entities, as individuals continue to receive stable income streams, particularly through regular salary deposits.
The decision reflects the differing levels of exposure to recent disruptions, including supply chain slowdowns and rising costs of shipping, transport, and insurance, which have placed increased pressure on commercial operations.
