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Wednesday , March 29 2023

Annual interest rate on loans should not exceed 6.5%: CBK

This post has been read 13764 times!

KUWAIT CITY, Jan 16: According to the Central Bank of Kuwait, the current maximum interest rate on consumer loans and housing installment loans in the State of Kuwait should not exceed 6.5 percent annually (3.5 percent discount rate, in addition to a margin of a maximum of 3.0 percent under the interest rate structure currently in force), reports Al-Qabas daily. In response to a question by MP Osama Al-Zaid, the Central Bank stated that this cost of borrowing is lower than the cost of borrowing from a group of major world countries and countries in the region, as evidenced by surveys conducted by the Central Bank of Kuwait on interest rates applied continuously.

In its statement, the Central Bank explained that the mechanism of the interest rate structure at the level of the loan and deposit portfolios of local banks, and the intervention of the Central Bank of Kuwait, affect the maximum limits of interest rates on loans, and obligate banks to these maximum limits without there being, in return, what obliges banks to have maximum or minimum interest rates limits on customer deposits.

Furthermore, in the event of an increase in the discount rate, banks can raise interest rates on loans within the maximum limits, while the interest rate on deposits may not necessarily rise, which the Central Bank of Kuwait does, and within the framework of monetary policy operations, by interfering in a way that ensures consistency in the work of the interest rate structure to establish the attractiveness and competitiveness of deposits in dinars.

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