Banks in Kuwait lure customers with interest free loans

Kuwait banks are now offering interest-free loans amounting to KD70,000 payable in four years, reports Al-Rai daily.

The banking competition to reach individual customers in this field has expanded as seven banks are currently offering interest-free loans to citizens; the lowest loan amount is KD25,000 in addition to cash gifts and exclusive benefits for customers. In terms of banking, the target group for obtaining good loans is those with high salaries.

In terms of accounting, whoever borrows KD70,000 must be receiving a minimum salary of KD3,645 to be able to pay the monthly installment of KD1,458 as per the directive of the Central Bank of Kuwait (CBK); which set a higher ceiling for the monthly deduction – 40 percent of the salary for employees and 30 percent of the pension for retirees.

Earlier last month, Al-Rai learned from relevant sources that “a number of banks, including traditional and others operating in accordance with Islamic law, have started marketing their loans of between 25 and 40 thousand dinars to new customers, without interest in addition what it called incentive discounts.

The sources stated “in the past, there were one or two banks that granted good loans out of social responsibility and for various reasons, but this move remained on a small scale, with a low credit ceiling,” noting that the banks “are now adopting a collective measure that enhances their tendency to raise the credit limit.”