BANK ACCOUNTS & CONSUMER CREDIT

Kuwait has seven conventional banks, Alahli Bank, Bank of Bahrain & Kuwait (BBK), Burgan Bank, Commercial Bank of Kuwait (CBK), Gulf Bank, Bank of Kuwait & the Middle East (BKME), National Bank of Kuwait (NBK), and one Islamic bank, Kuwait Finance House (KFH) as well as several specialist banks. The banks offer the usual range of services expected in an advanced country. There are no restrictions on the remittance of money overseas.

Bank Accounts
Generally speaking, all accounts with Kuwaiti banks include an ATM card which allow on-line enquiries and cash withdrawals on a 24-hour basis. New ATM cards cost KD 3 to 5. A minimum monthly charge of KD2 is imposed on current accounts where the balance falls below KD100 (KD50 for saving account), except for KFH which has a KD1 limit without penalty.

To open an account, a visitor will have to show his passport and may be asked for an overseas bank reference. A resident will be asked to show his civil ID but, if this has not yet been processed, a copy of his passport may be acceptable, on the understanding that a copy of his civil ID will be provided later.

Current accounts do not earn interest but the conventional banks have a wide range of savings accounts, in both KD and major foreign currencies, most with ATM facilities. Interest earned varies from time to time as per Central Bank directives. Terms, such as minimum balance, frequency of withdrawal, and penalty charges vary considerably from bank to bank.

Cheques & Credit Cards
Kuwait is still very much a cash society. Shops and government bodies seldom accept payment by cheque and cheques are used mainly for business transactions. Charges for cheque books range from KD1 to 4 depending on the size of the book and the bank.

Credit Cards
International and local credit cards are accepted in the main hotels and shops selling luxury items with international brand names, and at some of the larger supermarkets and shops selling consumer durables. But buying by telephone using a credit card is not possible.

International and local credit cards are issued by the banks. With local credit cards the outstanding balance must usually be paid in full at the end of the month, so extended credit is not available in this way. The issuer usually requires the card-holder to sign a direct debit order, allowing the balance outstanding to be drawn automatically from the holder’s bank account at the end of the month.

The banks usually require funds to be blocked as collateral, from 1.5 to 3 times monthly salary, though this may be waived if the cardholder’s salary is paid directly into his account at the bank. Charges for issuing new cards vary from KD25 to 30.

Consumer Credit
The conventional banks may allow overdrafts, but not KFH as it cannot charge interest which under Islamic rules is haram.

Consumer loans extended to individuals are limited, under Central Bank rules, to the lower of (i) ten times the borrower’s monthly income or (ii) KD10,000 or (iii) his accrued termina-tion-of-service indemnity, and to a maximum repayment period of three years. Minimum salary requirements may be as low as KD200 though some banks require the borrower to have been a customer for several years. The banks do not usually charge processing fees but some levy insurance fees, either 2% of the loan or a fixed annual charge of KD35. All banks charge the whole of the interest, minimally 6.75% under Central Bank rules, upfront and will sometimes refund interest for early repayment.
KFH and the Investment Dar, another Islamic financial institution, provide consumer credit through the use of mutajara or murabaha, forms of financing in which the bank buys the consumer-durable and resells it to the consumer at a higher price (which includes the financier’s profit) on an instalment basis. Hire-purchase type arrangements on conventional terms are available from companies such as the Commercial Facilities Company.