Sharp increase seen in Kuwaiti deposits in Iranian banks

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Move tied to about 20 pc interest rate compared to that offered by local banks

KUWAIT CITY, Aug 1: There has been a sharp increase in Kuwaiti deposits at Iranian banks lately due to low interest rates offered by Kuwaiti banks compared to those of their Iranian counterparts, reports Al-Qabas daily.

The daily quoting sources said Kuwaitis have millions of dinars in deposits at Iranian banks which offer about 20 percent interest rate. They noted the journey of deposits begins at exchange offices whose activities are supposed to be limited to buying and selling of currencies, and ends at the other side of the Gulf through Iranian banks, exchange offices or Iranian businessmen looking for the US dollars for trade purposes (import and export).

Meanwhile, sources explained that funds transferred to Iran via unofficial channels are not guaranteed or protected either in Kuwait or Iran, noting deals of this nature are unrecognized as they are executed through illegal channels — even if a contract is signed by the client and the bank in Iran or its brokers at the exchange offices in Kuwait.

They reiterated such contracts expose the parties involved to liability as per laws governing money laundering and anti-terrorism. It is worthy of note that several Iranian banks declared bankruptcy in the second half of 2017 while others prevented clients from withdrawing funds without any explanation.

This agitated the demonstrations witnessed in the country in early 2018, the sources said. The Iranian riyal since the beginning of 2018 has lost two thirds of its value, and worsened by the US announcement to withdraw from the nuclear treaty signed with Iran in 2015.

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