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.
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 KD3 to 5. A minimum
monthly charge of KD2 is imposed on current accounts where
the balance falls below KD100 (KD50 with BKME), except for
KFH which has a KD1 limit without penalty.
Any expatriate, even a visitor, can open a
current account but unless he has residence he is unlikely
to be given a cheque book. 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 a low of 1.125% (with instant
withdrawals) to a high of 2.125% (for fixed time deposits).
Terms, such as minimum balance, frequency of withdrawal,
and penalty charges vary considerably from bank to bank,
and finding the most suitable account for a particular saving
purpose takes considerable shopping around.
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
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.
Terms vary from bank to bank. The minimum salary
required to obtain a card is at least KD450. Credit levels
vary from 70% to 100% of monthly salary. 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.
The conventional banks may allow overdrafts, but not KFH
as it cannot charge interest which under Islamic rules is
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 termination-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.
Household durables can be bought on credit
from the larger shops. Usually a deposit of 30% is required,
the balance being payable in monthly instalments over 6
months or more. A salary statement from the buyer's employer
plus a copy of the purchaser's civil ID or passport is required.
If a local guarantor is not available, the seller will require
a series of postdated cheques to cover the repayments.
Currency exchange is available in most bank
branches, hotels and suqs. The hotels give very poor rates
of exchange. But most business areas contain several money
exchanges (see Business Directory Section) that offer good
rates even outside banking hours and sell currencies not
available in the banks. In Suq Al-Sarrafeen, the money changer's
suq, just off Fahd Al-Salem Street near the Municipal Gardens
close by Safat Square, the exchange rates are posted in
the windows of the little shops and can be compared by strolling
down the street.
When changing foreign currency into Kuwaiti
Dinar a receipt is not normally given. But the money-changer
is obliged by law to give a receipt when selling foreign
The cost of demand drafts varies from bank to bank, from
as little as KD1 to as much as KD25 for large amounts. Where
the draft is drawn in a foreign currency an additional charge
of anywhere from 0.2% to 1.4% of the draft value may be
Local transfers of funds cost from 500fils
to KD3, depending on the sending bank. Overseas wire transfers
cost KD7 or 8 plus the same foreign currency percentage
as for drafts, with some banks adding a KD3 handling charge
Many of the larger currency exchanges have
arrangements with well known banks in other countries and
their charges for remitting smaller sums overseas are significantly
cheaper than the banks, from KD1 to KD3 without any percentage
Travellers cheques can be purchased at all the banks. Some
banks issue their own cheques but cheques from internationally
known issuers are also available. Charges vary from 0.25%
to 1% of value, depending on the amount being purchased
and the selling bank.