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Lack of need motivates banks to abandon moving forward with project
KUWAIT CITY, Sept 7: Almost 4 years ago, a banking idea emerged, which was later submitted to the Central Bank of Kuwait, to the effect that banks need to establish a center to manage their cash needs locally, provided that its role, which was proposed to be established in the form of a company, is to support monetary operations in local banks, as well as about the center’s work as a coordinator between the supervisory regulator and local banks for cash deposits and withdrawals, reports Al- Rai daily.
However, it seems that something has recently changed in the banks’ visions and strategies in this regard, as it was learned that the Kuwait Banking Association informed the CBK that it does not see at the present time a worthy need to establish a cash management company in local banks, noting that the lack of the need to establish this company motivates banks to abandon moving forward with this project, what requires first the approval of the Central Bank for this step, given that an advisory tender was floated for the project, and disbursement amounts were allocated to it from the joint-stock banks.
The sources pointed out that the Central Bank, for its part, agreed to end the cash management center project, reinforcing its position with the leap achieved some time ago in the volume of digital transformation operations locally, which keeps pace with the regional and global movement, in addition to the bank customers’ orientation to alternative channels, and preparations for launching licenses to establish digital banks locally, which has significantly reduced the need for excessive use of cash transactions.
The sources explained that these changes reinforce the banking supervisory orientation towards being satisfied with the current centers that lead the cash management of banks or private companies, without the need to continue the project of establishing a cash management center. The sources stated that the reason for the emergence of the idea of establishing a cash management center is mainly due to the reading prepared by the banks at the time of their operating model, specifically with regard to managing cash withdrawals and deposits, as it seemed that some banks had special centers for cash management, and others depended entirely on external sources.
The sources indicated that local banks contract with money transfer companies to and from the Central Bank, in addition to their responsibility for distributing and collecting money to and from bank branches, in addition to some of them managing the operations and maintenance of Automated Teller Machines (ATMs) and Interactive Automated Teller Machines (ITMs) while others are outsourced, and local banks directly manage their clients’ cash needs.
The sources indicated that from here the goal of establishing a cash management center emerged, as it increased the efficiency of procedures for providing cash liquidity to local banks, reducing cash management expenses, obtaining cash at the right time for bank branches, and developing and improving the readiness of automated teller machines (ATMs) and automatic teller machines (ATMs). Interactive Teller Machine (ITM), whether for deposits or cash withdrawals, and the objective of this center was to improve the quality of banknotes in circulation.