Kuwait adopts new loan rules for banks

Kuwait's central bank will change its loan-to-deposit ratio rules for banks to boost lending, its governor said, according to comments carried by state-run news agency KUNA. The new loan-to-deposit ratios will be calculated based on loan maturities, KUNA said. Banks will be allowed to group other sources of funding such as bonds, loans and Islamic bonds along with deposits in calculating their loan-to-deposit ratios. According to the new rules, if the funding matures after one year, banks may have a loan to deposit ratio of 100 percent, and 90 percent if the funding matures between three months and a year. For maturities below three months, the loan to deposit ratio must not exceed 75 percent, according to the new rules. The rules will apply from May 11, Governor Mohammad al-Hashel was quoted as saying. The old rules stipulated an 85 percent loan to deposit ratio, KUNA said. Hashel said some of the goals of the adjustments were to urge banks to work towards the development of the financial markets and to increase interbank lending.