The Kuwait Banking Association refuted allegations of local banks inflating loans that sparked negotiations between the legislative and executive authorities about a debt relief scheme, and reiterated banks’ right to “defend their legal and constitutional rights.” The parliament passed a draft law in its first hearing that requires the government to purchase loans taken by citizens from Islamic and conventional banks between January 1, 2002 and March 30, 2008, waive off all the interest accrued in these loans and then reschedule their repayment in easy installments, provided that any installment must not exceed 40 percent of the debtor’s monthly income.
The bill was proposed based on speculations that violation of Central Bank regulations led to loans, availed of during the aforementioned period, mounting to incredibly high levels, thus making it difficult for the citizens to repay them.
“Local banks are dismayed as being national institutions, they are owned by thousands of Kuwaiti citizens. Due to such accusations, at least 9,000 Kuwaiti workers have every right to feel offended in a baseless fashion. Their reputation was being tarnished both inside and outside the country, thus negatively affecting the state in general and its business institutions,” read a statement released on Monday by the KBA.
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