Central Bank of Kuwait Sets Lower Interest Rate for SMEs

Posted on 04/21/2020


The Central Bank of Kuwait is setting a maximum 2.5% interest rate for banks financing small-to-medium enterprises to help them overcome the Wuhan coronavirus outbreak. Kuwait’s National Fund for Small and Medium Enterprise Development will provide 80% of the SMEs’ funding needs at no interest for up to three years. The remaining 20% will be financed by banks.

Earlier in April, the central bank had the credit risk weight has been reduced from 75% to 25% to calculate the capital adequacy ratio, in order to empower banks to provide more financing to this sector. Moreover, the CBK instructions allowed banks to release capital conservation buffers within the capital base, thus reducing capital requirements.

National Fund for Small and Medium Enterprise Development was enacted in April 2013 and is formed as an independent public corporation, with a total capital of 2 billion Kuwaiti dinar.

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