The Banking Executive Magazine - Septmber Issue 2021

Discussions were held between the supervisory leaders of the Central Bank of Kuwait (CBK) and officials of commercial banks to determine the situation of the entrepreneurs in terms of lending difficulties and the opportunities to address the situa- tion, in light of the conditions im- posed by the law to rescue small and medium enterprises affected by the repercussions of the COVID-19 cri- sis. They explained that there is a pro- posal concerning the need for banks to establish a fund with a capital of KD 10 million to be paid by all banks with different shares to be estimated later, provided that these amounts are allocated to cover the defaults that may arise in the loan portfolio that will be disbursed to eligible en- trepreneurs in accordance with reg- ulatory and banking standards. The initiative’s loan portfolio targeted outside the law to rescue them will reach KD 100 million. Based on these expectations, the fund’s capital was estimated on the basis that the maximum default ac- cording to the credit history will not exceed ten percent of the value of the loans granted in the worst case conditions. In the event that this banking move is proceeded, funding will be granted to eligible entrepreneurs with more flexible terms than the conditions in the current law. REVEALED The sources revealed that the bank- ing supervisory discussion comes after the continued inability of the entrepreneurs to access loans in ac- cordance with the law to rescue small and medium enterprises that was published in the official gazette on April 18. They said, “What reduces the chances of entrepreneurs benefiting from the law is its conditions that prohibit the use of financing for the purposes of paying installments or the burdens of credit facilities based on the customer at the time of the is- the BANKING EXECUTIVE 14 ISSUE 153 SEPTEMBER 2021 Central Bank of Kuwait, BANKS IN TALKS TO HELP SMES OVER COVID-19 REPERCUSSIONS