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Wednesday , November 25 2020

Banks planning to deduct loan installments from Oct salaries

‘Postponement would mean doubling loss of banks to KD 750m’

KUWAIT CITY, Oct 10: Banks are planning to resume deduction of loan installments starting from October’s salaries, reports Al-Rai daily quoting reliable sources. They indicated that, “There are no directions from either the Central Bank of Kuwait or other banks so far to extend the grace period”.

The sources said, “Any similar postponement of loan installments would mean doubling the loss of the banks to about KD 750 million, which the banks’ budgets cannot bear, especially in light of the losses caused by the government’s closure of businesses, and the growing need to form additional levels of precautionary measures in facing the COVID-19 repercussions.

The only solution that could motivate banks to postpone the installments is for the state to bear the cost of this decision. However, this is an unlikely decision due to the enormity of this cost, which amounted to about KD 380 million over the six-month period that ended last month.

The government is unable to bear additional expenditures at the present time, especially in light of the expansion of the deficit and the risks of declining levels of cash liquidity available for public spending, after reaching historically low levels to the point of being almost depleted.

The current plan is for the banks to deduct their installments, starting from the October salaries. Everything being circulated about the issuance of instructions to postpone the deduction of installments are mere rumors, as nothing has reached the banks so far that contradicts their directions.”

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