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KUWAIT CITY, May 24: The Minister of Commerce and Industry Muhammad Al-Aiban has issued a ministerial decision for regulating the controls and provisions of credit facilities resulting from installment sales of goods and services. According to the decision, every citizen and expats has the right to obtain goods in installments up to a maximum of KD 5,000 without interest, reports Al-Anba daily.
The new decision specified two conditions for these installments. The first condition is that the full amount is to be paid within a period of three years. The second condition is that the value of the installments should not exceed 40 percent of the net salary for employees and 30 percent for retirees, after obtaining an authorization from the customer to inquire from Ci-Net about the debit balance data arising from all other obligations of the customer according to the established network.
According to informed sources, the decision will close the door for companies that are active in “cashing out goods” operations for citizens and residents who are borrowers to the maximum, not to mention closing the loophole through which they were active after it became necessary for the seller of the commodity to link with the Credit Information Network Company (Ci-Net).
The ministerial decision required all seller loans, including companies, institutions and commercial establishments, to register with the Ci-Net within six months from the publication of the decision in the official gazette, with the necessity of obligating it to a number of conditions, including:
1 – After obtaining an authorization from the customer, inquire from Ci-Net about the credit rating arising from all other obligations of the customer according to what is established in the aforementioned network.
2 – The monthly installment due from the customer, in addition to the installments due for other obligations registered on Ci-Net, should not increase 40 percent of the net salary for employees and 30 percent for retirees.
3 – The value of the commodity sold to a single customer on the installment system should not exceed KD 5,000. It should be paid in equal monthly installments over a period not exceeding three years.
4 – The value of the commodity sold by installments shall not exceed the value of the declared price in the event of immediate payment.
The decision obligated the granting companies to add the necessary commercial activities related to selling by installments to their commercial licenses. It also obligated them to participate in the automated system of the Ci-Net, while committing to providing credit information to customers according to the procedures specified by Ci-Net.
The decision authorized the sellers, upon their request, to cancel subscription to the company’s system, provided that the installment sale system for goods and services is canceled, prior approval is obtained from the ministry, and a certificate is submitted to Ci-Net issued by the external auditor of the seller stating that there are no open or closed accounts or installment sale.
On the other hand, the decision prohibited seller from charging any administrative fees for installment sales, and not imposing any fees on their customers directly or indirectly in return for inquiring about them in the Ci-Net system. It obligates donor companies to establish clear credit policies and work procedures approved by the management of the company or establishment for sale in any form of transfer of ownership in installments for commodities and services.
When presenting this type of sale, it also obligates to take into account the controls for requesting a credit facility and the minimum limits required for concluding the contract so that the customer’s request includes, as a minimum, the details of the commodity or service and payment details.
The decision stipulated that the customer should be informed of all the conditions, obligations and financial implications resulting from the purchase of the commodity or service in accordance with the contract to be concluded. The customer should be given a clear and simplified statistical table showing the value and number of the installments, and the sellers’ retention of documents indicating that.
The decision also stipulates the necessity of defining the rights and obligations of each of the entities donating the commodity or service and the customer according to contracts that are clearly formulated, understandable, and compatible with the provisions of laws, local decisions, and relevant decisions. The contracts for granting credit facilities by selling in any form must include transfer of ownership in installments for goods and services as a minimum (basic data of the customer, type of commodity or service, value of the commodity or service, term of sale, number of monthly installments, payment dates, value of the monthly installment, and method of payment or payment). The implementation of the provisions of the decision should take place six months after the date of its publication in the official gazette.
The decision called on the sellers to take into account the customer obtaining a copy of the contract and signing it to the effect, with the need to provide all necessary information about the goods or services. In this regard, the account statements of the goods or services must include detailed information related to the number and value of the paid and remaining installments until the due date. It is also required to keep all documents of sales of goods and services to customers throughout the payment period and until full payment and the end of the legal limitation period, but the electronic preservation of these documents should continue.
The decision obligated the sellers to develop policies and take measures that would ensure the security of information, the confidentiality of the data entered and extracted from the automated system of Ci-Net, and not to be viewed by anyone except the concerned and authorized persons