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KUWAIT CITY, April 8: Banks have proposed an alternative project for the government project that was referred to the National Assembly to guarantee the financing of the affected small and medium enterprises, as they called for the use of the same law previously presented by the Central Bank of Kuwait after it was amended by the banks, reports Al-Rai daily.
The banks suggested that the state guarantee for the financing should be 100 percent, and that it must guarantee 75 percent of the principal financing provided to the initiative without returns or interest, provided the maximum total portfolio is KD 500 million subject to increase by a decision from the Minister of Finance. While the banks justified their proposal by saying the risk ratio is high and the proposed financing period is long, the financing interest was estimated at one percent above the discount rate, on the condition that it be variable and not fixed.
This is unlike the government project, which proposes an interest of 2.5 percent in the first year of the “grace period” to be borne by the state’s general budget in full, and the same in the second year, provided that it is equally divided between the state’s general budget and the client, and also 2.5 percent of the third is borne by the client in full.
As for the repayment period, the banks suggested paying the principal and the return within not more than ten years, and choosing a grace period not exceeding 3 years from the period of financing. In the event that the aggrieved customer does not commit to paying one of the payments for a period of 90 days, he is prohibited from any profit cash distributions. In the event of default, the value of the guarantee is determined at 75 percent of the remaining balance of the defaulted financing principal.