Tony Daher: A culture of financial literacy, saving, & investment is crucial in light of evolving banking industry

Kuwait, 10 March 2021: As part of its commitment to educating customers about their banking rights and raising awareness about cybersecurity, Gulf Bank is participating in the Diraya campaign, an awareness campaign initiated by the Central Bank of Kuwait and the Kuwait Banking Association. The latest campaign aims to provide awareness to customers about their rights and to educate the general public about all matters that are related to banking and finance.

The Diraya campaign spans several topics, including the borrowing process, bank cards, cybersecurity, security tips, and services for customers with special needs. The campaign also aims to clarify the mechanisms for raising official complaints in an effort to protect customers’ rights, and also aims to highlight the banking sector's tasks and roles in stimulating and developing the economy.

Customer Awareness Crucial Aspect of Digital Transformation Strategy

Commenting on the Diraya campaign, Gulf Bank’s CEO, Mr. Tony Daher, remarked: “With the latest advancements and progress witnessed by the financial and banking industry, the need for greater financial awareness is ever more apparent, in the hopes that customers can make the most of all the services available to them, without compromising their cybersecurity. Gulf Bank fully supports the Diraya campaign and encourages all its customers to follow the campaign’s activities and stay tuned to all its awareness messages.”

Appreciation & Commitment of Awareness Efforts

Mr. Daher added, “We are very pleased with the latest campaign’s initiative to spread financial literacy and a culture of savings and investment, in an effort to educate customers about various banking services and how to benefit from them. We appreciate the latest initiative spearheaded by the Central Bank of Kuwait and the Kuwait Banking Association to educate the general public about financial and banking matters, and are fully committed to providing any support from our various departments in service of this campaign and its objectives.”

Borrowing and Financing

The Central Bank of Kuwait has set clear and specific policies to direct borrowing and financing operations for banks. With this in mind, the Central Bank of Kuwait has issued clear and specific instructions to banks and financing companies to provide their customers with loan details, including: the value and number of installments, payment dates, the ratio of the installment to the net salary, and the consequences of non-payment.

Clients are also entitled to a period of at least two days to review the contract comprehensively before signing it. Upon signing the contract, clients can also obtain a draft of the contract, which includes details such as: the type of loan, the repayment period, the amount of the installment, and the loan return.

The instructions from the Central Bank of Kuwait necessitate that banking and financing establishments provide financial advice to the customer before and during financing. As per the instructions, financial institutions are obligated to clarify the risks of increasing financial obligations to the client, especially in the event of a change in the client’s financial conditions, whether due to a change in work, retirement or even a change in the absolute interest rate.

Loan Types

There are two types of personal loans available to clients: consumer and housing loans. It is important for clients to be aware of the differences between the loans, and the instructions related to each of them, in order to be able to assess their financial requirements in the best possible way.

Consumer Loans

A consumer loan is a medium-term personal loan with a loan period not exceeding five years. The maximum amount that can be granted under a consumer loan is KD 25,000 and is provided to clients for the purpose of financing personal needs, such as the purchase of a car, furniture, or obtaining various educational and health services.

Housing Loans

A housing loan is a long-term personal loan meant to to be repaid over a period not exceeding 15 years. The maximum amount that can be granted under a housing loan/financing facility per customer is KD 70,000, and is provided to clients for the purpose of buying, building or renovating a private residence.

As part of the regulatory process of granting personal loans, and in an effort to enable customers to benefit while averting the risk of difficulties in re-payment, and in an effort to avoid burdening clients with financial obligations, the Central Bank of Kuwait has allocated a clear set of controls for banks to adhere to when financing clients. The set of controls apply to all clients, both employees and retirees, and take into account the various financial conditions of each of these two categories, mandating the provision of financial advice and all the necessary details of the financing contract, including the clarification of the various features of the financing process, including: the interest rate to the amount of financing, the ratio of the monthly installment to the net monthly salary, the number of installments that the customer must pay, the components of each installment, and other related information. Details regarding the financing process must be provided before the contract is signed, with the loan institutions factoring in a two-day period for their clients to review the contracts and read their terms and conditions carefully, in an effort to guarantee that every client is fully aware of their rights and obligations under the contract before signing.

It is worth noting that Gulf Bank is keen on spearheading numerous awareness campaigns and initiatives as part of its ongoing commitment to economic sustainability, and regularly highlights similar awareness initiatives on social media. Last year, Gulf Bank launched “Let’s Talk Business,” a series of interviews with local entrepreneurs designed to stimulate an entrepreneurial culture in Kuwait, and discuss how to overcome business challenges during an economic crisis such as the pandemic. As part of the series, business leaders and entrepreneurs discuss the keys to success for small businesses, how to conduct business during times of crisis, how to successfully diversify and expand your business, and more. Gulf Bank is committed to maintaining a robust sustainability program at the community, economic, and environmental levels through sustainability initiatives that are strategically selected to benefit both the country and the Bank.