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KUWAIT CITY, Jan 28: According to informed sources, some banks have recently adopted a tighter policy with their clients, specifically expatriates whose salaries have been suspended for more than three months. These measures are not limited to just suspending the granting of new loans to clients who have been “fired”, but also include stopping their credit cards, especially MasterCard and Visa, reports Al-Rai daily.
They explained that the new banking trend of some banks also includes customers whose salaries have been reduced by a large percentage for more than six months, and have not returned to the rates based on which the values of credit cards granted to them were estimated.
The new banking policy allows some banks to freeze credit cards in the event that the holder’s salary has not been deposited for more than 90 days. Through this, the bank would apparently have indications of the growing possibility of his dismissal from his job. In this case, there is an increase in the risks of the bank’s continued exposure to the customer even from the window of his credit cards.
Some banks have resorted to a more cautious policy in recent times, specifically with expats who have been outside the country for a long time, by freezing their credit cards even if they still retain their full credit balance.
There are banks that prefer to freeze all potential credit windows, including the untapped ones, in order to reduce the risk of unseen default, especially if it appears that the customer will be outside the country for a long period without receiving his salary. Another bank has adopted the policy of reserving insurance in exchange for renewal of credit cards upon expiry.
In this regard, customers explained that, when they were outside the country recently for about five consecutive months, they were surprised to discover that their credit cards were suspended despite not exceeding the validity date and despite the continued deposit of their salaries. As soon as they returned to the country, they visited the bank, and the bank employees informed them that it was done due to the fluctuation in their salary movement during the past months, and that the amounts transferred to their accounts per month were less than what was determined when the card was granted, which required the amendment.
The employees also refused to renew their cards despite proving that they are still employed, but they made an offer regarding the possibility of granting new credit cards, provided that the customer presents a balance first to the bank with the value of his cards, in exchange for reactivating the credit card.
The customers indicated that the employees, despite this condition, stressed that the amount of credit that was previously permitted will be reduced by nearly 50 percent.
They said, “If some banks relaxed their credit tightness towards expatriates, it will be based on reservations about financing some professions for non-Kuwaitis, who are expected to resume work. This is in an effort to reduce the risks of default that still threaten some sectors”.
Meanwhile, the sources said, “Strict banks have resorted to activating this procedure after exhausting a set of procedures, foremost of which is the attempt to communicate with the customer whose salary is interrupted, in order to determine whether he is still in the country or abroad. If he fails to do so and has speculations about diminishing opportunities for job benefits that can be reserved, the bank moves to the most cautious stage which is to freeze the customer’s credit cards or reduce their financial weight. This was based on the testimonies provided by the customer”.
The sources stressed that banks exclude to a large degree from their financing targets the segment of employees who receive low and medium salaries, and set minimum limits for those who are entitled within the policy of “minimum salary”.
They indicated that banks that still have an appetite for credit risk require guarantees from customers who raise concerns.
The sources said, “Funding is difficult to meet, especially for those who work in jobs threatened by Kuwaitization, and in the sectors that are struggling to survive, especially tourism, aviation, restaurants and small enterprises in general.
Of course, what fuels the banking concerns in this regard is the continuing spread of the COVID-19 virus, despite the start of its vaccination campaign, as banks prefer to continue the policy of avoiding high risks that could be affected by the continued impact of local businesses”.