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Banks have no right to increase interest rate on a loan

KUWAIT CITY, Oct 28: The Court of Appeals ruled that a local bank had no right to increase the interest rate on a loan, after the plaintiff lawyer Ena’am Haydar said the bank breached the law when it deducted interest from her client loan before it started deducting the actual amount loaned to her client.

Lawyer Haydar lamented how the bank erred in implementation of the law in deducting interest of the loan instead of deducting the initial amount that the bank gave her client. She explained that this practice is a direct breach of trade law No. 101, which stipulates that the loan given to a client is not determined, when repaying, on how it was spent, whether commercially or otherwise.

Law No. 305 of the civil law considers invalid every agreement in which payment is given in return of benefitting from the loaned money or lease through deducting interest before actual payment

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