Regulatory Alerts2008-10-08
Central Bank of Kuwait Instructions Concerning Islamic Banks Finance Activity
The Central Bank of Kuwait mandates all registered Islamic banks to establish and maintain a comprehensive, Sharia-compliant finance policy that standardizes investment formulas, contract specifications, and risk management practices. The instructions require written board-approved policies detailing credit applications, collateral diversification, portfolio-to-deposits ratio limits (increased to 85%), and strict monitoring of customer compliance and interrelated party exposures. Additionally, banks must secure prior regulatory approval for new financing formulas and submit monthly data on share trading facilities to the Kuwait Stock Exchange, ensuring capped exposure and accurate sector classification.
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