The Central Bank of Kuwait has directed banks and finance companies to deal with customers whose businesses have been affected by the recent geopolitical developments in the region in a 'positive' manner. This regulatory step reflects parallel moves to strengthen the banking sector and the capabilities of business clients. The Central Bank clarified that, in order to mitigate the effects of these developments on clients, banks and finance companies can take the necessary steps to positively engage with business clients and companies whose operations have been harmed by the current regional situation. This can be done by postponing their obligations for those who wish, subject to the basic principles of postponement, primarily the proven damage to the borrower's business according to approved standards. The agreement is to be made within the framework of the credit policies approved by each bank or company with its clients. The Central Bank's emphasis on the importance of considering the clients' circumstances under the current conditions aims to achieve a balance between supporting affected clients and taking credit risks into account. This follows a package of measures taken on March 26th to counter the effects of the current geopolitical situation and its impact on the economic situation, which included regulatory directives and tools of overall hedging policy, especially concerning liquidity requirements and capital adequacy ratios. The Central Bank called on banks and finance companies to document the consent of clients covered by this measure, which should include a statement of the financial impact of the postponement and the taking of necessary measures, along with updating related credit information through 'Ci-Net' (Kuwait Credit Information Network). It is expected that each bank and finance company will define the scope of postponing the obligations of clients whose businesses have been affected by the current geopolitical developments, with this information to be submitted according to the audited quarterly financial statements as of June 30th. According to sources cited by Al Rai, the 'positive' handling of clients affected by geopolitical developments by allowing the postponement of their dues will be in accordance with the credit policy of each bank or company. They added that this step constitutes a more flexible credit policy for clients whose businesses have been affected by the war, with the postponement period for affected clients not expected to be counted towards the maximum repayment periods. The sources mentioned that the postponement of installments for business owners affected by the consequences of the ongoing war does not apply to loans and financing operations for which banks and finance companies have taken previous legal actions, which have now become due in full because of the client's delay in meeting their obligations before the law was enacted. Regarding the possibility of extending the loan postponement decision to individual clients, similar to companies and business owners whose businesses were affected by the war, the sources clarified that the easing of regulatory supervision on clients whose businesses have been harmed by geopolitical developments takes into account the negative developments that have emerged in the global, regional, and business environment over the past few weeks. These developments have seen slowdowns in supply chains, rising shipping and transportation costs, and increased insurance for their goods, which exposes some businesses to these risks, unlike individuals who continue to enjoy the continuity of their salary deposits without being affected.
