CBK ties funding to deposits

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KUWAIT CITY, Oct 13: Board of Directors of the Central Bank of Kuwait will gradually withdraw the package of regulatory mitigators related to liquidity and the capital adequacy standard, and return to what it was before the Corona crisis, provided the maximum allowed funding is adjusted in relation to the size of deposits to become 95 per cent instead of 100 percent, as of January 1, 2022, and adjust again to 90 percent in early 2023, reports Al-Rai daily quoting informed. The sources added, the Central Bank has circulated to the banks its decision about gradual easing of the regulatory mitigation package on two occasions, the first at the beginning of next year and the second on January 1, 2023, including amending the regulatory limits for the regulatory liquidity ratios, the liquidity coverage standard and the stable net financing standard.

At the beginning of April, the Central Bank had launched a stimulus package, which included reducing the requirements for liquidity standards by approximately 77 percent, and it was scheduled to end in December of the same year, but it was extended for an additional 6 months, to end at the end of last June and it was decided to work on it until the end of next December. According to the decision, the Central Bank allowed the banks, as a matter of facilitation, to continue releasing the precautionary capital buffer within the capital base, which reduced the requirements for liquidity ratios, and allowed the banks to benefit from an additional lending space from their funds and precautionary reserves of nearly 5 billion dinars, to direct them to the eligible economic sectors.

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