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COVID-19 MEASURES

MEASURES TAKEN BY CENTRAL BANK OF KUWAIT TO LIMIT THE IMPACT OF COVID-19 PANDEMIC

  • Discount rate reduced two times from 2.75% to 1.5%, being a historic low.
  • Repo rates, overnight, one-week and one-month reduced by 1%.
  • A 0.125% reduction for the prices of other monetary policy instruments, for the entire interest rate yield curve up to the 10 year period. This includes repurchase operations (REPO), CBK bonds, term deposit system, direct intervention instruments and debt instruments.
  • Allowed all banks to postpone data submission for Q1 2020, instead to only provide the regular supervisory reports.
  • Capital adequacy ratio lowered from 13% to 10.5% by allowing banks to utilize the (capital conservation buffer).
  • Lowered the risk weight for SMEs from 75% to 25% with a new definition matching KNF definition.
  • Increased the maximum lending limit to be 100% instead of 90%.
  • LCR reduced, to be 80% instead of 100%.
  • NSFR reduced, to be 80% instead of 100%.
  • Regulatory liquidity ratio (RLR) reduced, to be 15% instead of 18%.
  • Increased the Maturity Ladder Limits by 10% for all buckets as follows:
    • For 7 days or less from 10% – 20%.
    • For 1 month or less from 20% – 30%.
    • For 3 months or less from 30% – 40%.
    • For 6 months or less from 40% – 50%.
  • Increased the Loan to Value (LTV) ratio for properties as follows:
    • Financing the Purchase of Land: from 50% to 60%.
    • Financing Real Estate Purchase: from 60% to 70%.
    • Financing Construction of RE: from 70% to 80%.
  • A circular  sent to banks to exempt clients from the financing concentration limits in assessing a credit proposal that includes economically important projects, which add value to the local economy.
  • A circular issued to all banks to organize the repurchase, and sale of banks’ stocks. As banks are required to provide CBK of a detailed description of each transaction on a weekly basis.
  • A circular issued to all banks based on IFRS-9 guidelines to account for losses incurred due to household loans moratorium period of six months. As losses would be held against banks retained earnings, and for the purpose of calculating capital base (Basel III) banks may gradually account for losses (25% per year during 2021 to 2024).
  • A circular issued to banks regarding the postponement of scheduled payments of clients impacted by the pandemic, as it stipulates not to charge interest on the accrued/unpaid interest during the moratorium period.
  • The Central Bank of Kuwait continues to perform its tasks related to the main operations, security procedures, payment and settlement systems and electronic clearing of cheques during the leave period approved by the distinguished cabinet.
  • The Central Bank of Kuwait’s readiness to ensure the continued provision of the necessary financial services to the public, including procedures for providing cash to banks around the clock, in addition to opening communication channels to provide the necessary support to banks to continue to perform their business.
  • The Central Bank of Kuwait continues to hold frequent meetings with banks’ executive management regarding the measures that must be taken to maintain financial stability in these exceptional circumstances.
  • CBK issued a circular to all local banks on regarding activating emergency and business continuity plans urgently. 
  • Requiring banks to continue providing the basic financial services to the public without interruption, and provide all means to carry out these operations quickly, efficiently and with the usual safety, including cash withdrawals and deposits.
  • Continuous maintenance of ATM machines and feeding them with sufficient banknotes to meet the needs of the public without any interruption.
  • Continue to process cheques and implement internal and external financial transfers.
  • Ensure the continuity of banking services through electronic channels and points of sale, and the demand for development of new channels and tools.
  • Continue to provide banking services to commercial companies supplying commodities linked to food security and community needs, to ensure that these needs are met in a natural way.
  • Call centers at banks continue to operate and answer all customer inquiries.
  • Increasing limit on contactless payments (TAP) from KD10 to KD25.
  • Stop the fees for Point of Sale transactions, ATM withdrawals and Online banking for 6 months.
  • Affected customers of banks can postpone repayments for 6 months without incurring any penalty fees.
  • Banks are instructed not to execute any sales of assets held as collateral against loans/financing unless the customer requests this, and in such cases the CBK should be provided full details of the transaction. This is until markets stabilize and economic conditions improve.
  • Banks were instructed to adequately review the portfolio of each client, and all investment portfolios in addition to performing stress tests to assess their viability.
  • A circular to all local banks regarding the weekly follow-up of financing developments provided to individuals, small and medium enterprises, and economic entities affected by the repercussions of the Corona virus (COVID-19) crisis, and granted according to the controls approved by the distinguished cabinet.
  • During the crisis, CBK performed stress tests on the banking system, at the backdrop of low oil prices and implications on government expenditure.
  • A circular issued to banks requiring a quarterly audited reporting of the cost of financing corporates and SMEs impacted by the pandemic. The report should be audited by external auditors and signed by the CEO.
  • A circular issued to all banks including K-Net to provide hand sanitizers at all ATMs and POS machines. 
  • To ensure safety, banknotes were isolated and stored for four weeks prior to market recirculation and the CBK is disinfecting its vaults, bank note counters and sorting machines to protect the public.
  • Instruction sent to banks to provide financial and moral compensation to all workers from the banking sector during the lockdown period.
  • CBK established a KD 10 million fund to support state efforts to counter the impact of the COVID-19 pandemic, funded by the local banks in Kuwait.
  • Instructed banks to maintain national employment level.
  • Launch of “Eidity” with the cooperation of local banks and K-Net. An  online platform for the distribution and exchange of money Eidiya (which is typical an exchange of money between families for the occasion of Eid).
  • CBK publishes its own “Return to Work” protocols, in cooperation with a global advisory entity for banks and their branches.
  • A circular was issue by CBK to all regulated entities to accept the Kuwait Mobile ID which is an electronic version of the civil ID.
  • The Institute of Banking studies under the supervision of CBK continued to provide the Kafa’a training program for fresh graduates entering the banking sector via online platforms and utilized modern E-learning methods as dictated by the on-going pandemic.
  • “Measures Taken by the Central Bank of Kuwait to Limit the Impact of COVID-19 Pandemic” Booklet – in Arabic.
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