KIB: Banks are responsible for offering financing solutions to meet the needs of various segments

Kuwait: Under the umbrella of its participation in the national "Let's Become Aware" campaign, and in line with the Bank’s social responsibility focus on financial literacy, KIB is seeking to generate greater public awareness when it comes to all matters related to finance. This includes improving resilience to and awareness of fraudulent financial practices and highlighting the role of the banking sector in general, and banking products the sector offers in particular, in people’s lives. Accordingly, the Bank is focusing on disseminating instructional and informational content regularly through its various communication platforms and social media channels.

It serves to note that the "Let's Become Aware" campaign, organized by the Central Bank of Kuwait (CBK) in collaboration with Kuwait Banking Association (KBA) and local banks, was launched in an effort to strengthen and expand the role of the local banking sector when it comes to social responsibility, with the ultimate goal of empowering people with life-enhancing financial knowledge. The campaign is being driven across the social media platforms of CBK, KBA and all local banks as well as through the campaign’s website, dirayakw.com.

As part of the effort to highlights various financial tools within the framework of the campaign, Othman Tawfeqe, General Manager of KIB’s Retail Banking Department, spoke about the various types of financing solutions available to consumers. "Business owners and individuals often need an infusion of cash to finance certain activities, purchase a commodity or simply cover personal expenses. Accordingly, banks, whether conventional or Islamic, as well as financing providers offer financing solutions to consumers based on their specific request and needs, in return for repayment within a set period of time with an agreed-upon repayment schedule,” said Tawfeqe. “Here, it becomes necessary to distinguish between Islamic financing solutions and conventional options, as they are distinctly different in concept and action. The former provides funds through Murabaha, wherein the Islamic bank purchases the asset from a third-party supplier/vendor and sells it to the customer at a price that includes a profit margin agreed upon by both parties, which is then repaid in installments. Conventional banking, on the other hand, relies on an interest-based system as a proportion of the amount lent, where the bank has the right to review the interest rate every five years. The new interest rate is then determined by adding a profit margin to the current discount rate set by CBK, which is later distributed over the remaining monthly installments.”

Tawfeqe pointed out that the types of financing solutions available are varied in order to cater to customer’s diverse financial requirements, with the most common types being consumer financing to finance the purchase of a car, home furniture, medical care or education, as well as other consumer needs. The financing of individuals is approved after assessing the eligibility of the potential borrower against the criteria set forth for lending, including the ability to repay the bank on time. The bank might also request an employment verification letter, a net monthly income certificate and a salary continuation confirmation. One of the key benefits of consumer financing is the fact that a smaller profit margin can be added with more flexible repayment conditions to suit the customer’s needs.

Tawfeqe emphasized that financing solutions are an important financial activity that help boost economic development and support local businesses, such as for example when it comes to real estate financing provided to customers in order to purchase or maintain a home or make a real estate investment. Banks also play a major economic role by providing financial solutions to small businesses and aspiring entrepreneurs which are instrumental in helping them start or grow their businesses, and which include a variety of options tailored to suit their different business needs.

"KIB is always keen to provide comprehensive financial solutions and Shari’ah-compliant financial services to employees in both the public and private sectors, which help them achieve their goals and meet their financial needs with ease and flexible repayment plans. Our financial services include automotive financing of up to KD 25,000 to finance the purchase of a new or used car, with a grace period of up to 6 months, as well as up to KD 70,000 construction material financing for purchasing construction material with no down payment and with up to 6 months grace period before paying the first installment. KIB also offers up to KD 25,000 personal financing which covers the purchase of commodities and consumer goods such as furniture, electronics and marine equipment, with up to 3 months grace period before paying the first installment. We also offer medical financing of up to KD 25,000 with 0% profit, covering some of the best medical centers in the country, which includes flexible repayment terms for up to 3 years and without the need to transfer salary. KIB also provides financing solutions to business owners such as construction material finance, real estate finance, project finance and SME finance," Tawfeqe concluded.

For more information on KIB’s Murabaha products and financial services, please contact 1866866, visit www.kib.com.kw or follow the Bank’s social media accounts @KIBpage.

© Press Release 2021