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Wednesday , June 29 2022

Banks request Central Bank exemptions for exceeding credit cards limit

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Card frozen if bills not paid after 60 days

KUWAIT CITY, Feb 19: The banks recently discussed with the Central Bank of Kuwait (CBK) six points regarding the instructions of personal finance operations for consumer and housing purposes and issuing credit cards, reports Al-Rai daily quoting official sources. The same sources pointed out that the banks proposed to the Central Bank to accept some exceptional cases to exceed the credit limit of the card, which goes beyond the limit of the local banks.

“The bank’s automated systems should not guarantee the automatic rejection of transactions on credit cards that exceed the limit granted to the customer. In case the customer requests to exceed the limit, the bank must examine the credit situation of the customer before allowing it,” say sources.

In this regard, the banks explained that although their systems do not accept any credit limits, their systems automatically reject amounts exceeding the limit of the card when the customer takes the approval to pass the transaction and before it is registered on the card with which the customer performs operations such as renting cars or hotel rooms, sources explained. The banks indicated they are requesting approval to deduct the amount, noting that although the limit of the card allows deduction, it does not record the amount on the card only after receipt of the car or room from the client, and sources added that “since this approval is suspended for a period of 10 to 15 days, it is automatically canceled allowing the customer to use the available balance of the card, indicating after that period the hotel or the leasing office may record the amount on the card without obtaining new approval”.

In this case, banks are obliged to record such amounts. sources said the card may be issued by the merchant bank directly to the card account, which may result in exceeding the credit limit of the card, indicating the client can then either make a claim to cancel the transaction or to accept and pay the excess amount on the credit limit in full, in approving some exceptions. In a letter to the Central Bank, the banks moved to instructions regarding the necessity of “the period of recovery of balances due to the use of credit cards should not exceed one year renewable, provided that this period shall be calculated from the date of monthly bills due to be deducted from the customer’s account during each month.”

The banks are agitating to collect 8.33 percent of the debit balances due to the use of credit cards as a minimum premium. The banks have another opinion regarding the specific procedures for freezing the card. The Central Bank states that “the card is frozen in case bills are not paid after 60 days of maturity.”

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