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Kuwait's central bank plans to tighten commercial lending rules after having already restricted consumer lending to tackle record inflation in the Gulf Arab state, a newspaper said on Sunday. Citing unidentified banking sources, daily Al Rai said the central bank had asked banks to curb growth of its commercial loans which had exceed average levels of previous years. It did not make clear what rules the central bank was expected to issue shortly to curb commercial lending. The value of commercial loans rose to 1.95 billion Kuwaiti dinars ($7.34 billion) at the end of February compared to 1.69 billion dinars a year earlier, according to the paper. Central bank officials could not immediately be reached for comment. The head of the Kuwaiti banking association, Abdul-Majeed Al Shatti, did not confirm the central bank plans but said curbing commercial loans would help tackle inflation, the paper quoted him as saying. Kuwait's annual consumer inflation accelerated to a record 7.54 per cent in December, driven by rents and food costs. Last month, the central bank, which last May dropped a dollar peg to lower the costs of non-dollar imports, tightened rules on consumer lending to try to rein in inflation. Borrowers arranging fresh loans are now limited to monthly interest and repayment instalments equivalent to no more than 40 per cent of their salaries, compared with 50 per cent before. For those on pensions, the limit is 30 per cent. (Reuters) |
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