Jul 07 2008 |
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Kuwait: Central Bank loan limits to damage businesses
KUWAIT: Following the Central Bank 's recent decision to limit the maximum amount of loans given to individuals or firms, a large number of Kuwaiti companies are seeking financing for their projects elsewhere, reported Al-Rai.Commenting on the issue, former Finance Minister Bader Al-Humaidhi condemned the bank's decision, saying that it was a bad choice and needed to be reconsidered.
The decision limits the banking sector's ability to contribute to national economic development," he insisted, declaring that the decision would be certain to limit local companies' ability to expand.
Al-Humaidhi also noted that the decision had led many local companies to seek foreign finance opportunities and loans from banks outside Kuwait after taking letters of credit from the local banks.
These decisions need to be reconsidered, particularly since Kuwait is the only country applying this, despite the fact that we have a free economy and good rules', he said.
On his part, Dr. Mohammed Al-Alloush, the chairman of the board of the Al-Oula Investment Company, stated that the development already achieved by Kuwaiti companies would surely require further expansion of their projects, which would necessitate further financing.
With the new regulation, local companies will be helpless, namely smaller ones who will not be capable of getting loans from banks in UAE or Bahrain and who will most likely have to liquidate part of their stocks or their real estate assets," he said, warning that this would eventually negatively affect the local financial and real estate markets.
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