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BANK 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.
Bank Accounts
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 the bank.
Credit Cards
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.
Consumer Credit
The conventional banks may allow overdrafts, but not KFH as it cannot
charge interest which under Islamic rules is haram.
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 installment 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 installments 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
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 currency.
Overseas Remittances
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 made.
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 on top.
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 charge.
Travelers Cheques
Travelers 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
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