Maximum Limits for Credit Concentration

4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION A) Rules and regulations concerning the maximum limits for credit concentration Instructions No. (IBS/101/1995). B) Forms pertaining to the instructions concerning the maximum limits for credit concentration. C) Amendment of the text of paragraph (6) of Article “EIGHTH” of the instructions No. (IBS/101/1995). D) Circular concerning the facilities granted to banks and financial institutions, whether local or foreign. E) Circular No. (2/BS/74/1999) concerning the customer’s disclosure in the Credit facilities’ contracts of the parties related thereto, economically or legally. F) Amendment of paragraph (1) of Article “EIGHTH” of instructions No. (IBS/101/1995). G) Circular No.(2/BS/173/2005) concerning maximum limit for credit concentration based on an application to be submitted by respective banks before according the credit, together with a through study explaining the feasibility of the requested facility and the reasons for requesting the exceptions. H) Circular No (2/BS/192/2006) concerning the amendments to the application of the instructions on maximum credit concentration limits to all foreign banks. I) Circular No. (2/BS, IS/251/2009) requesting to provide the Central Bank of Kuwait with the form detailing credit facilities exempted from the maximum limits for credit concentration (AM28), and the form on compliance with the maximum limits for total large credit concentrations (AM29). J) Circular for online provision of data of Form (AM28) relating to the details of credit (finance) facilities exempted from the maximum limits for credit (finance) concentration and Form (AM29) on compliance with the maximum limits for total large credit (finance) concentrations.

K) Circular No. (2/BS, IS, FS/320/2014) for providing CBK , on a quarterly basis, through online with the form of outstanding credit liabilities accounting for 5 % of the capital base (AM18) and form of the credit liabilities of parties with interrelated interest (AM19) on their due dates audited by the external auditors at the end of each year. L) Circular No. (2/BS, IBS/347/2014) to all Kuwaiti banks regarding large exposures and the risk of concentrations with credit customers. M) Circular No. (2/BS/IBS/IS/IIS/FS/IFS/465/2020) to all local banks, investment companies and financing companies regarding the cessation of receiving a number of forms via MainFrame.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION THE GOVERNOR Thul-Qi’da 19, 1415 H April 19, 1995 The Chairman, Circular concerning the Maximum Limits for Credit Concentration I would like to advise you that the Board of Directors of the Central Bank of Kuwait, at its meeting held on 16/4/1995, has endorsed the Instructions No. (IBS/101/1995) concerning the Maximum Limits for Credit Concentration as amended. All local banks shall observe these instructions as effective today. Best Regards, Salem Abdul-Aziz Al-Sabah ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ  Circulated to all local banks.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION Instructions No. (IBS/101/1995) regarding the Maximum Limits for Credit Concentration Introduction In compliance with the framework endorsed by the Gulf Cooperation Council “GCC” Countries, and in line with Basle Committee Directives in respect of the Credit Concentration System, the Board of the Central Bank of Kuwait has hereby resolved to set up new rules and regulations concerning the Maximum Limits for Credit Concentration for local banks and investment companies to conform with. these rules and regulations aim at distributing the credit risks, in their broad definition, over a larger base of customers in such a manner that minimizes the risks that may be encountered by banks or investment companies as a result of concentrating credit in a limited number of customers. FIRST: THE MAXIMUM LIMIT FOR CREDIT CONCENTRATION The Maximum Limit for Credit liabilities of any single customer toward a bank or an investment company shall not exceed 15% of capital base. The Collateral eligible to be excluded from these liabilities shall be limited to the following:
 Cash deposits, and cash margins
 Kuwaiti Treasury Bills and Bonds that mature within a period not exceeding one year. The Collateral to be excluded shall be subject to the following conditions:

Cash Deposits and Kuwaiti Treasury Bills and Bonds shall have to be pledged
in favour of the concerned bank or the investment company;
The bank or the investment company shall have all the legal rights that enable
it - under all circumstances - to arrange for the netting between the credit liabilities and the cash deposits and Kuwaiti Treasury Bills and Bonds pledged as security for the same;
Cash Deposits and Treasury Bills and Bonds pledged against the credit
liabilities shall be kept at the party extending the credit. As for the investment companies that are not authorized to accept deposits from customers, the cash deposits pledged in their favour shall be kept at any of the local banks;

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION
4. In the event of differences between currencies of the cash deposit and credit
liabilities, the risks resulting from the exchange rate fluctuations shall be taken into consideration. The cash deposits in foreign currency shall be limited to the major convertible currencies. A percentage of 80% only from the deposit value shall be excluded from the credit liabilities that are subject to calculations of the maximum limit for credit concentration. Additionally, these deposits shall be reviewed and valuated on a weekly basis. Government and quasi-government entities, agencies and departments in the GCC countries that do not work on commercial bases shall be excluded from the maximum limit for credit concentration. SECOND: DEFINITION OF CAPITAL BASE the capital base comprises the core capital and the supplementary capital, in accordance with the details mentioned in item fourth of the instructions addressed to the local banks in respect of the capital adequacy standard. THIRD: DEFINITION OF CREDIT LIABILITIES credit liabilities, used as a basis for calculating the credit concentration ratio, shall mean the entire customer's liabilities toward the bank or investment company. this includes the head office, together with the internal & external branches, besides the subsidiaries of the bank or investment company that conduct similar activities. Such liabilities comprise the following:

CASH CREDIT LIABILITIES:
Such commitments include:
A. Utilized Cash Liabilities:
 Loans, Overdrafts; whether with or without collateral,  Discounted bills, and other bills of similar nature.  Bonds and similar financial investments issued by the customer and included within the assets of the bank/investment company. B. Unutilized Cash Liabilities:
Unutilized limits of the granted Cash Credit Facilities; whether they are Loans or Debit Current Account Lines.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION
2. NON-CASH CREDIT LIABILITIES:
They include:
 Letters of Credit.
 Letters of Guarantee.
 Bank Acceptances.
 Foreign Exchange Contracts & related Interest Rate Contracts thereto (including: Forward Contracts, Options, and other instruments resulting in credit risks). Such contracts to be included within the credit liabilities shall be confined to the potential credit risks.  Sales of assets with the right of Recourse.  Other liabilities of similar nature. FOURTH: DEFINITION OF SINGLE CUSTOMER(1) For the purpose of calculating the Credit Concentration Ratio, any debtor parties that are in effect economically or legally associated and interrelated shall be considered as one Single Customer; whether they are associated through Common Ownership or Common Directors. Such parties comprise:

A customer in his capacity as a Natural Person, and in his capacity as a Natural
Guardian over his minor children.
Joint Accounts, where the customer is a joint partner.
Establishments owned solely by the customer.
Partnerships, where the customer acts as a partner.
Simple or Limited Partnerships, where the customer acts as a partner.
Capital Corporations (such as: Shareholding Companies, Companies with
limited liabilities, Limited partnerships,) where the customer owns more than 50% of capital, or holds power of control.
Customers guaranteed by the client in the form of personal guarantee before
the bank or investment company, irrespective of the legal status of such customers. ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ  The volume of the Credit Risks shall be calculated in accordance with the following credit equation Formula:
(Contract value x Conversion Factor) + contract replacement cost if positive, or zero if negative. This shall be adopted in accordance with the instructions addressed to the local banks in respect of Capital Adequacy Standard. ( ) Banks must include an item in the credit facilities contracts which stipulates the customers commitment to disclose the economically or legally related parties, in accordance with Central Bank of Kuwait circular issued on 21/10/1999.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION
8. Any other debtor parties toward the bank or investment company, who are
economically or legally associated and interrelated with the customer where if any of them encounters financial difficulties, the customer’s ability to settle his credit liabilities toward the bank or investment company will be adversely affected. FIFTH: CONNECTED PARTIES WITH INTER-RELATED INTERESTS Parties shall be deemed to be “connected or related” if one party has the power to control the other parties, or has the power to exercise significant influence on such parties when taking the financial and operational decisions. In the context of these Instructions, the following parties are deemed to be “Connected and Related Parties”:. A. Members of the Board of Directors of the bank or investment company; B. Principal owners and Shareholders of a bank or investment company. This refers to the parties that own 5% or more of the capital.
C. Key Management Personnel of a bank or investment company. This refers to
Head of Executive Staff, Deputies, Assistants, Executive Managers, and others who hold administrative positions of significant influence on the decisions for granting credit. D. Subsidiary Companies. In this context, a Subsidiary Company shall mean any enterprise where the concerned bank or investment company owns more than 50% of its capital, or where it has power of control on it. E. Affiliated Companies. In this context, an Affiliated Company shall mean any enterprise where the concerned bank or investment company owns 20% or more of its capital, and has significant influence on it. F. External Auditors of the bank or investment company. The following principles shall be applied to the “Connected Parties with inter-related interests”:

The Maximum Limit for Credit Concentration obtained by Parties with interrelated interests mentioned hereinabove in (A), (B) and (C) altogether should
not jointly exceed 50% of capital base, without prejudice to the Maximum Limit determined for the Single Customer. The Maximum Limit for the cumulative credit facilities extended by the bank or investment company to all such Key management personnel Mentioned above in (C) shall not exceed 15% of capital base. Loans extended to them for personal purposes (only Consumer loans, in accordance with internal by-laws regulations adopted by the bank or investment company) shall be excluded;

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION
2. Credit facilities and placements extended by the bank or investment company
to subsidiaries or affiliated companies as mentioned hereinabove in (D) and (E) shall not exceed 20% of the capital base in its comprehensive definition for any single company, while the cumulative limit for all such companies altogether shall not exceed 60%. Such credit facilities and placements extended by subsidiaries or affiliated companies to their counterparts, that belong to the same bank or investment company in terms of ownership, shall be added to the numerator of the ratio;
3. The bank or investment company shall not grant any credit facilities to its
external auditors.
SIXTH: CLUSTERING LIMIT: TOTAL LIMIT FOR LARGE CREDIT CONCENTRATION The aggregate of large credit concentrations (meant to be the concentrations, which exceed 10% of the capital base), including the exceptions for which the bank has obtained prior approval from the Central Bank of Kuwait, shall not exceed fourfold of the capital base. SEVENTH: PERIODIC DATA All banks or investment companies shall provide the Central Bank of Kuwait, in accordance with the forms designed in this respect, with periodic statements on all credit concentrations that reach 5% or more of capital base. EIGHTH: OTHER PROVISIONS:

Credit facilities extended to banks and financial institutions(1)
shall be excluded from these Instructions. The bank or investment company should be careful and meticulous in this area, especially when determining the maximum limits for credit concentration separately for each bank or financial institution(2) .
The bank or investment company shall prepare the accounting and controlling
systems through which the maximum limit for credit concentration shall be fully adhered to, whether in respect of each customer or the connected parties with inter-related interests, in accordance with the rules contained in these Instructions.
As for the credit facilities extended before implementing these Instructions, and
exceeded the set maximum limit, the concerned bank or investment company shall provide the Central Bank of Kuwait with related periodic statement thereof, in accordance with the forms designed in this concern. Commitment to reduce the extended credit limits and utilized balances for such cases shall be strictly undertaken, in such a manner leading to compliance with the set maximum limit within a period not later than December 1995. ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ ( ) The Financial institutions were canceled according to the Central Bank of Kuwait circular issued on 14/1/2004. ( ) Banks were directed to submit a detailed report in this regard on a quarterly basis according to Central Bank of Kuwait circular issued on 31/12/1998.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION
4. The Board of the Central Bank of Kuwait may, when it deems necessary,
exclude(1) any customer from the maximum limit set our pursuant to a request to be submitted from the concerned bank or investment company before granting the credit. Such requests shall be accompanied with a detailed study displaying the feasibility of granting the credit requested and reasons underlying such exemption. These cases shall be limited to the minimum and only in case of necessity. The bank or investment company shall bear all risks resulting from the facilities extended to their customers, including the facilities extended to their customers, including the facilities for which prior approval of the Central Bank of Kuwait has been sought for exclusion from the maximum limit for credit concentration(2) .
5. These Instructions shall be enforceable and effective immediately upon
issuance.
6. The Instructions No. (IBS/104/1993) concerning the Maximum Limits for
Credit Concentration issued in November 1993(3) shall be cancelled. April 1995 ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ (1) Pursuant to the circular dated 17/11/2008, included under Item "U" of Section (10) of this Manual, and within the framework of the program for rectifying thee conditions of local investment companies, banks must follow the procedures provided for under the instructions on credit concentration, stipulating that the Central Bank of Kuwait 's prior approval of the excess must be obtained, where applications for approval will be considered on a case by case basis. Banks should observe in this respect the contents of the subject general rules with regard to Kuwaiti banks' participation in granting finance to companies. (2) Circular No.(2/BS/173/2005) issued on 11/1/2005 on maximum Limit for credit concentration based on an application to be submitted by respective banks before according the credit, together with a thorough study explaining the feasibility of the requested facility and the reasons for requesting the exceptions. (3) This paragraph “ Any other instructions previously issued in this concern and contradicted with this instructions ”, has been added in accordance to the Central Bank of Kuwait circular issued on 4/12/1996.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION B) Forms pertaining to the instructions concerning the maximum limits for credit concentration. THE EXECUTIVE DIRECTOR Muharram 23, 1416 H. June 21, 1995 The General Manager, Instructions No. (IBS/101/1995) concerning the Maximum Limits for Credit Concentration in their amended Form With reference to the Central Bank of Kuwaitis letter of 19/4/1995 with regard to the Instructions No. (IBS/101/1995) concerning the Maximum Limits for Credit Concentration in their amended form. Please stop sending us the forms related to the previous instructions in respect of the maximum limits for credit concentration, and provide us instead - on quarterly basis - with the two forms attached herewith. They are namely: No. (A.M. 18) concerning the outstanding credit liabilities, which form 5% of the capital base or more, and No. (A.M. 19) concerning the outstanding credit liabilities of the connected and related parties. Provision thereof shall be conducted through the use of the direct on-line computer system (Center of Risks-Third Issue), as effective 30/9/1995. The data and information required as per both the aforesaid forms must be communicated into the computer system within a maximum period of ten days from the end of the said quarter.(1) (2) Best Regards, Executive Director for Supervision Department Hameed Ahmed Al-Rasheed ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ  Circulated to all local banks. ( ) A Circular issued on 06.01.2014, as included in Item “K” hereof requiring the banks to provide us, on a timely basis, with these two forms audited by their auditors as at the end of the year. ( ) Circular No. (2/BS/IBS/IS/IIS/FS/IFS/465/2020) was issued on 01/09/2020 under Item (M) hereof regarding the cessation of receiving a number of forms via MainFrame.

Central Bank of Kuwait Capital base KD MM
Supervision Department Credit Concentration Ratio Credit Section Statement of Outstanding Credit Liabilities which are 5% of the Capital base or more, as per Instructions No.(IBS/101/1995) according to the position as on / /19 Form No. A.M. (18) Name of the Bank / Company……………….. (KD. 000's) Secret no of the debtor & related parties (1) Cash Credit Liabilities (2) Non-Cash Credit Liabilities (3) Total Outstanding Liabilities (1+2) (4) Collateral against Credit Liabilities (5) Net Liabilities Of the Customer Toward Subsidiaries (6) Total Liabilities Of the Customer (3-4) + 5 * (7) Remarks Utilized Unutilized Total L/C's L/G's Acceptances Others Total Cash Deposits & Cash Margins Kuwaiti Treasury Bills & Bonds with up to one year maturity Total I- Debtor (A) II: Related Parties (B) Total (B) Grand Total (A+B)

This statement is prepared quarterly.
Net Liabilities of the customer toward subsidiaries, are computed in the same manner in which the customer's liabilities toward the bank or investment company is computed.
Total Credit Facilities extended to one customer should not exceed 15% of the capital base & total large concentrations (which exceed 10% of the capital base & extended to one customer) should not exceed
four times the capital base.
Signature:……………………………
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
B)
THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION Forms pertaining to the instructions concerning the maximum limits for credit concentration.

Central Bank of Kuwait 1- Capital base.
Supervision Department 2- Total Concentrations of the Board Members, Major Shareholders, Key Officers. Credit Section 3- Concentration Ratio (2:1)%. Statement of Outstanding Credit Liabilities regarding the parties with interrelated interests* as per Instructions No.(IBS /101/1995) according to the position as on / / Form No. A.M. (19) Name of the Bank / Company…….. (KD. 000's) Secret No. Debtor Capacity

(1)
Cash Credit Liabilities
(2)
Non-Cash Credit Liabilities
(3)
Total
Outstanding
Liabilities
(1+2)
(4)
Collateral
(5)
Net Credit
Liabilities
Toward
Subsidiaries
*
(6)
Customer's
Total
Liabilities
(3-4) +5
Utilized
*
Unutilized Total L/C's L/G's Acceptances Others Total I- Debtor II- Related Parties

Please refer to Article” Fifth” of these instructions in respect of definition of the related parties and the maximum credit concentration limits, which the said parties may obtain jointly or severally.
This shows whether the debtor is a board member, a major shareholder or a key officer of the bank or company, or an affiliate or a subsidiary.
In the event the debtor is a subsidiary or affiliate company, the amounts deposited therewith by the bank or company, should be added.
Net Liabilities of the customer toward the subsidiaries, should be calculated in the same manner in which the customer's liabilities toward the bank or investment companies are calculated. Signature:…………………
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
B)
THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION Forms pertaining to the instructions concerning the maximum limits for credit concentration.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION C) Amendment of the text of paragraph (6) of Article “EIGHTH” of the instructions No. (IBS/101/1995). THE GOVERNOR Rajab 23, 1417 H. December 04, 1996 The Chairman, Circular to All Local Banks I would like to advise you that the Board of Directors of the Central Bank of Kuwait resolved, at its meeting of 1/12/1996, to amend the text of paragraph (6) of Article “EIGHTH: Other Provisions” of the Instructions No. (IBS/101/1995) concerning the Maximum Limits for Credit Concentration. It is worth mentioning that this amendment supersedes any other instructions previously issued in contradiction with the above mentioned Instructions which are currently in effect. Attached please find a copy of the last page of the present Instructions, amended as aforementioned. Best Regards, Salem Abdul-Aziz Al-Sabah ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ  Circulated to all local banks.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION C) Amendment of the text of paragraph (6) of Article “EIGHTH” of the instructions No. (IBS/101/1995).
3) The Board of the Central Bank of Kuwait may, when it deems necessary,
exclude any customer from the maximum limit set out pursuant to a request to be submitted from the concerned bank or investment company before granting the credit. Such requests shall be accompanied with a detailed study displaying the feasibility of granting the credit requested and reasons underlying such exemption. These cases shall be limited to the minimum and only in case of necessity. The bank or investment company shall bear all risks resulting from the facilities extended to their customers, including the facilities extended to their customers, including the facilities for which prior approval of the Central Bank of Kuwait has been sought for exclusion from the maximum limit for credit concentration.
4) These Instructions shall be enforceable and effective immediately upon
issuance.
5) “The Instructions No. (IBS/104/1993) concerning the Maximum Limits
for Credit Concentration issued in November 1993 shall be cancelled, together with any other previously issued instructions that contradict the rules of these Instructions.”

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION D) Circular concerning the facilities granted to banks and financial Institutions, whether local or foreign. THE MANAGER Ramadhan 13, 1419 H December31, 1998 The General Manager, Circular to all Local Banks We would like to refer to the provisions of item No. (1) of the Clause under “EIGHTH” Other Provisions", of the Rules & Regulations issued by the Central Bank of Kuwait concerning the Maximum Limits for Credit Concentration, regarding exclusion of the credit liabilities extended to banks and financial institutions from such limits. Such exclusion shall be conditional upon the banks' aspiration to exercise meticulous and excessive care in the treatment of details in this regard, particularly in determining the maximum credit concentration limits for each bank or financial institution separately. You are requested to provide us with the policy set up by your bank in respect of the maximum credit concentration limits for banks and financial institutions, whether local or foreign. Moreover, you are requested to provide us with detailed statements indicating the volume of the actual concentrations for the local or foreign banks and financial institutions towards your bank as at 31/12/1998 in compliance with the two tables attached herewith. Nevertheless, your bank will have to observe providing us with the above-mentioned statement at the end of each quarter. Best regards, Manager of Supervision Department Ibrahim Ali Al-Qadhi

Appendix No. (1)
The Bank’s funds employed at local banks and financial institutions As on / / Bank Name………… (KD. 000's) Name of the local bank or financial institution Deposits (1) Certificates of Deposits (2) Credit Facilities Investments (5) Total funds employed (6) (1+2+3+4+5) Collateral Provided Cash Non-Cash Participations Bonds Others Type Value Granted (3) Utilized Granted Utilized (4) Amount % Total
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
D)
THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION Circular concerning the facilities granted to banks and financial Institutions, whether local or foreign.

Appendix No(2)
The Bank’s funds employed at foreign banks and financial institutions Bank Name………… ( KD. 000's) Name of the foreign bank or financial institution Name of the country Deposits (1) Certificates of Deposits (2) Credit Facilities Investments (5) Total funds employed (6) (1+2+3+ 4+5) Collateral Provided Cash Non-Cash Participations Bonds Others Type Value Granted (3) Utilized Granted Utilized (4) Amount % Total
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION D) Circular concerning the facilities granted to banks and financial Institutions, whether local or foreign.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION E) Circular No. ( 2/BS/74/1999) concerning the customer's disclosure in the facilities' contracts of the parties related thereto, economically or legally. THE GOVERNOR Rajab 12, 1420 H. October 21, 1999 The Chairman, Circular No. (2/BS/74/1999) to all Local Banks You are kindly requested to note that the Central Bank of Kuwait Central Bank of Kuwait, within the framework of its concern to reduce the credit risks that the local banks may be encountering as a result of focusing their credit facilities in a limited number of clients, has previously issued instructions to the banks on April 19, 1995 concerning the Maximum Limits for Credit Concentration. In compliance with these instructions, the total credit obligations for a single customer toward the bank shall not exceed 15% of the capital base. Such instructions stipulate in Article “FOURTH: DEFINITION OF SINGLE CUSTOMER” that for the purpose of calculating the credit concentration ratio, any debtor parties that are in effect economically or legally associated and interrelated shall be considered as one Single Customer; whether they are associated through Common Ownership or Common Directors. It has been noticed that the data of credit concentration which the Central Bank of Kuwait receives from several banking and financial units are not sound, partly due to lack of information available to such units to verify the parties with interrelated interests within the framework of the definition of the single customer as shown in the instructions mentioned above. Consequently, it has been resolved that local banks shall include a new item in the credit facilities contracts they conclude with customers. Through such item, the customer shall undertake to disclose the economically or legally parties (in accordance with the definition provided in Article "FOURTH" of the Central Bank of Kuwait instructions issued on April 19, 1995 concerning the maximum limits for credit concentration), without disclosing creditworthiness or indebtedness of such parties. Thereupon, the banks shall assume the responsibility for verifying the data and information disclosed by the customer in this concern. Additionally, the banks shall be responsible for determining whether or not the parties disclosed by the customer would be included in calculation of the credit concentration ratio concerned in pursuance to the mentioned instructions. Best Regards, Salem Abdul-Aziz Al-Sabah

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION F) Amendment of paragraph (1) of Article EIGHTH of instructions No. (IBS/101/1995). THE GOVERNOR Thul-Qi’da 22, 1424 H. January 14, 2004 The Chairman, Circular No. (2/BS/153/2004) to all Local Banks I would like to advise you that the Board of Directors of the Central Bank of Kuwait, decided in its meeting on 11/1/2004 to amend Paragraph (1), under Item Eighth of Instructions No. (IBS/101/1995) concerning the Maximum Limits for Credit Concentration issued on 16/4/1995, to read as follows:
“ Credit facilities extended to banks shall be excluded from these Instructions. The bank or investment company should be careful and meticulous in this area, especially when determining the maximum limits for credit concentration separately for each bank ”. A grace period shall be granted to banks where the percentage of credit concentration of some local investment companies exceed the Maximum Limit for Credit liabilities of any single customer (set at 15% of the capital base in its comprehensive definition) until the maturity date of fund uses with these companies. Best Regards, Salem Abdul-Aziz Al-Sabah

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION G) Circular No.(2/BS/173/2005) concerning maximum limit for credit concentration based on an application to be submitted by respective banks before according the credit, together with a thorough study explaining the feasibility of the requested facility and the reasons for requesting the exceptions. THE GOVERNOR Thul-Qi’da 30, 1425 H. January 11, 2005 The Chairman, Circular No. (2/BS/173/2005) to all Local Banks Within the framework of the intent of the Central Bank’s instructions of 19/4/1995 concerning the maximum limit for credit concentration, and which provided for distributing credit facilities in their broad concept over a wide customer base, particularly the rules of Item (Eighth / 4) of the subject instructions which provided for the possibility of exempting1 any customer from the established maximum limit for credit concentration based on an application to be submitted by respective banks before according the credit, together with a thorough study explaining the feasibility of the requested facility and the reasons for requesting the exceptions, and which stipulated that such cases should be kept to the minimum and to utmost need, we would like to advise you that the Central Bank of Kuwait will take into account the following guidelines when considering banks applications for exempting any customer from the maximum limit established for credit concentration:

The extent of the bank’s compliance with the regulatory instructions of the
Central Bank of Kuwait.
The comments pertinent to the bank’s performance, such as capital adequacy,
liquidity position, etc.
The extent of regularity of the debt of the subject customer, whether at the
level of the applicant bank or at the level of the other units of the banking system.
Whether the facility to be accorded is intended to finance any projects of
national or strategic nature, such as industrial projects, power and water stations and infrastructure projects.
Whether the facility to be accorded is intended to finance any housing or
public utilities projects, according to the following priorities:
ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ ( ) Pursuant to the circular dated 17/11/2008, included under Item “U” of Section (10) of this Manual, and within the framework of the program for rectifying the conditions of local investment companies, banks must follow the procedures provided for under the instructions on credit concentration, stipulating that the central bank of Kuwait prior approval of the excess must be obtained, where applications for approval will be considered on a case by case basis. Banks should observe in this respect the contents of the subject general rules with regard to Kuwaiti banks’ participation in granting finance to companies.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION H) Circular No (2/BS/192/2006) concerning the amendments to the application of the instructions on maximum credit concentration limits to all foreign banks. THE GOVERNOR Jumada Aloula 16, 1427 H. June 12, 2006 The Chairman, Circular No. (2/BS/192/2006) to all Foreign Banks operating in the State of Kuwait Concerning The Amendments to the Application of the Instructions on Maximum Credit Concentration Limits With reference to the Central bank of Kuwait instructions concerning the maximum credit concentration limits, I would like to advise you that the Central Bank has decided to introduce certain amendments to the application of these instructions to foreign banks branches operating in Kuwait, as follows:

The maximum credit concentration limits shall be calculated on the basis of
an indicator for measuring the capital base of the branch, representing (20) times the amount allocated for the branch’s operations in Kuwait (i.e. 15 KD million). In all cases, the maximum credit concentration limit for anyone single customer may not exceed 45 KD million, while observing the rules of item (2) below.
It has to be observed that, in all cases, the amount of the maximum credit
concentration limit for a single customer may not exceed the amount calculated on the bases of the capital base for the head office of the branch (and not the group’s capital base).
Save as mentioned above, foreign bank branches shall be committed to
implement the other relevant rules included in the instructions concerning the credit concentration limits. In addition, the Central Bank of Kuwait instructions concerning the maximum ratio of the net credit facilities portfolio to deposits (80%)(1) , shall remain valid. We would like to stress in this regard that the foreign banks branches operating in Kuwait may not direct the customers to borrow from the branches of the external banks of the group, nor make any arrangements aimed at facilitating the formalities for granting such loans. Accordingly, the lending activity should be ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ (1) These instructions have been ceased and amended instructions were introduced for the maximum limit of finance as from the lapse of transition period on 10.5.2012 to become effective from 11.05.2012 in accordance with the Circular No. (2/BS, IBS/283/2012) included in Section (10).

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION I) Circular No. (2/BS, IS/251/2009) requesting to provide the Central Bank of Kuwait with the form detailing credit facilities exempted from the maximum limits for credit concentration (AM28), and the form on compliance with the maximum limits for total large credit concentrations (AM29). THE MANAGER Thul-Hijja 01, 1430 H November 18, 2009 The General Manager, Circular No. (2/BS, IS/251/2009) to all Local Conventional Banks and all Conventional Investment Companies licensed to provide Loans This has reference to the instructions Ref. (IBS/101/1995) regarding the maximum limits of credit concentration, and in line with the Central Bank of Kuwait’s follow-up of compliance by banks and companies with the maximum limits stated under such instructions, you are kindly requested to complete both attached forms, (AM28) detailing credit facilities exempted from the maximum limits of credit concentration, and (AM29) on compliance with the maximum limit of the total large credit concentrations. You should provide us with both forms on a quarterly basis, with effect from 31/12/2009, within a maximum of ten days from the end of each quarter. Both forms sent to us by the end of each year should be audited by the external auditors. You will be notified later of the date for providing us with both forms directly online.(1) (2) Best regards, Yousef J. Al-Obaid Manager, Off-Site Supervision Department ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ (1) A Circular issued on 04.04.2012, as included in Item “J” hereof requires that the two forms mentioned in this letter should be provided directly online by banks, investment companies and financing companies. (2) Circular No. (2/BS/IBS/IS/IIS/FS/IFS/465/2020) was issued on 01/09/2020 under Item (M) hereof regarding the cessation of receiving a number of forms via MainFrame.

Central Bank of Kuwait
Supervision Sector
Off-Site Supervision Department
Credit Section
Capital Base: KD ‘000
Details of Credit Facilities Exempted from Maximum Limits of Credit Concentration* As at / / Form AM(28) Name of Bank/Company: (Conventional Banks and Investment Companies) KD ‘000* No. Customer Secret No. Purpose of Exempted Facilities Date of Approval Of Exemption Date of Expiry of Exemption (1) Cash Facilities Granted (2) Non-Cash Facilities Utilized (3) Total (1+2) (4) Collaterals Submitted Against Exempted Facilities * (5) Net Customer Facilities from Subsidiaries * (6) Total Customer Facilities (3-4)+5 (7) Actual Ratio of Credit Concern. Of Exempted Facilities % (8) Ratio of Credit Concern. Of Exempted Facilities as per Approval % (9) Ratio of Credit Concern. Of Facilities of Customer and Related Parties % (10) Ratio of Credit Concern. of Non – Exempted Facilities (9)-(7) Remarks Total

This statement is prepared quarterly.
These collaterals are limited to deposits, cash guarantees, and Kuwaiti treasury bills and bonds of one-year maturity.
Calculation of net customer facilities from subsidiaries is made in the same way his net facilities from the bank/company is calculated.
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION I) Circular No. (2/BS, IS/251/2009) requesting to provide the Central Bank of Kuwait with the form detailing credit facilities exempted from the maximum limits for credit concentration (AM28), and the form on compliance with the maximum limits for total large credit concentrations (AM29).

This statement is prepared quarterly. Large credit concentrations are defined as those exceeding 10% of the capital
base. Total of these concentrations (including the cases exempted from the maximum limits of credit concentration) should not exceed four times the capital base. Granted cash, and utilized non-cash facilities.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION J) Circular for online provision of data of Form (AM28) relating to the details of credit (finance) facilities exempted from the maximum limits for credit (finance) concentration and Form (AM29) on compliance with the maximum limits for total large credit (finance) concentrations. THE MANAGER Jumada Aloula 13, 1433 H April 04, 2012 The General Manager, Circular to all Local Banks, Investment Companies and Financing Companies Reference is made to the circular dated 18/11/2009 for quarterly providing CBK with AM28 concerning credit facilities (finance transactions) excluded from the maximum limits of credit concentration (financing) and AM29 concerning the commitment with the maximum limit of the total large credit concentrations (financing). The bank/ company are requested to upload the data of the abovementioned forms as on 31/12/011 and 31/3/2012 On-Line not later than the end of April 2012. Starting from 30/6/2012 data, CBK will be provided by these two forms On-Line within a period not exceeding 10 business days from the end of the reporting quarter. Best Regards, Reem M. Al-Roumi Deputy Manager for Statistics & Credit Affairs

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION K) Circular No. (2/BS, IS, FS/320/2014) for providing CBK , on a quarterly basis, through online with the form of outstanding credit liabilities accounting for 5 % of the capital base (AM18) and form of the credit liabilities of parties with interrelated interest (AM19) on their due dates audited by the external auditors at the end of each year. THE MANAGER Rabi-ul-Awwal 05, 1435 H January 06, 2014 The General Manager, Circular No. (2/BS, IS, FS/320/2014) to all conventional banks, investment companies and Financing Companies Reference is made to circular No. (IBS/101/1995) dated 21/6/1995 for providing CBK, on a quarterly basis, through online with (AM18) report for outstanding liabilities accounting for 5 % of the capital base and AM19 report for credit liabilities of the parties with interrelated interests within a period not exceeding 10 days of the reporting quarter, You are kindly requested to continue providing CBK with the said two forms quarterly within a period not exceeding 10 days from the reporting quarter. The two forms at the end of every year shall be audited by external auditors with effect from 31/12/2013. Best Regards, Waleed Mahmoud Al-Awadi Manager, Off-Site Supervision Department

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION L) Circular No. (2/BS, IBS/347/2014) To all Kuwaiti banks regarding large exposures and the risk of concentrations with credit customers. THE GOVERNOR Rabi-ul-Awwal 02, 1436 H December 24, 2014 The Chairman, Circular No. (2/BS, IBS/347/2014) To all Kuwaiti banks regarding large exposures and the risk of concentrations with credit customers In order to keep up with the international regulatory developments and in light of the importance accorded by the Central Bank of Kuwait (the “CBK”) to large exposures and the risks of concentrations with Kuwaiti banks’ credit customers as well as the mechanism followed by banks regarding follow-up with and management of such related risks, your bank should provide us with the following:

A summarized report, to be attached to the closing financial statements for the
year ended 31 December 2014, on your bank’s approved risk management strategy, specifically with regard to large exposures and concentrations with credit customers. Your bank shall further provide us with the methodology adopted by the bank to assess the creditworthiness of customers, the bases and rules adopted by the bank to assess the positions of the various collaterals and their periodicities, as well as the quality of such collaterals. Banks should further provide us with the reports prepared on customers with large exposures, their periodicity, as well as the management levels to which such reports are submitted, the types of studies conducted within the bank on the various economic positions and their impact on customers’ positions. Banks should also explain the manner in which such conditions are dealt with in case such customers face any issues which degrade their financial positions. The CBK should further be provided with any major amendments made in this regard.
An annual statement, as at 30 September of each year, showing the top 25
customers with the highest debts as well as their related parties as per the attached table. This statement should be signed by the Chairman and the CEO, and should be accompanied by a summarized report on the bank’s assessment and future views as regards the risks’ levels to which such customers are exposed respectively. This report should cover one upcoming year at least, provided that the elements of assessment should cover the following at minimum:
 The bank’s views on the future of the customer’s economic business sector.

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION L) Circular No. (2/BS, IBS/347/2014) To all Kuwaiti banks regarding large exposures and the risk of concentrations with credit customers.  The ability and potentials of the customer to keep up with future changes in this business, taking into consideration the exposure of the customer to a group of stressed scenarios.  The future competitive standing, the level of cash flows and projected profits of the customer in light of the business indicators and results.  The ability of the customer to discharge his future obligations at their maturity dates and the extent of his commitment in his prior undertakings. The aforementioned statement should be delivered to us within 14 business days from the end of September on an annual basis. As regards the statement as of 30 September 2014, it should be submitted to the CBK along with the financial statements of Q1 2015. Best Regards, The Governor Dr. Mohammad Y. Al-Hashel

Attachment (1)
Credit Facilities Extended to the Top 25 Customers (excluding banks) of _________ Bank as at __________ (A) Customer Nam: Customer’s Main Business: Sector: KD ‘000 Description Customer’s PIN Cash Facilities Non-Cash Facilities Total facilities Existing Collaterals (b) Facility Category Level of the Creditworthiness of the Facility As Per the Assessment Conducted by the Bank (d) Granted Availed Purpose Granted Availed Purpose Granted Availed Type Value Last Assessment Date Performing Non-Performing 1 2 3 4 5 6 (4+1) (5+1) Category (c) Value of Allocated and Precautionary Provision First: Facilities extended to the customer:
Total of “First”
Second: Facilities Extended to Related Parties:
Customer with PIN Code:
Accordingly, ………………………………….
Total of
“Second”
Third: Total of (First + Second)
Fourth: Total facilities extended to the customers’ business sector:
Cash: KD ________ thousand
Non-cash: KD ________ thousand
Total: KD ________ thousand
Fifth: Ratio of total availed facilities extended to the customer and his related parties/total facilities extended to the sector: _____% Sixth: Ratio of the credit concentration of the customer calculated as per the instructions issued on the maximum limits for credit concentration Chief Executive Officer Chairman A. To be prepared at group level (The bank and its external branches and subsidiaries) B. Does not include assignments of right.
C. There are remarks on it, below level, doubtful collection or bad debts.
D. A summarized paper should be submitted on the manner through which a customer’s creditworthiness is reached at the bank.
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION I) Circular No. (2/BS, IS/251/2009) requesting to provide the Central Bank of Kuwait with the form detailing credit facilities exempted from the maximum limits for credit concentration (AM28), and the form on compliance with the maximum limits for total large credit concentrations (AM29).

CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls
4- THE MAXIMUM LIMITS FOR CREDIT CONCENTRATION.
M) Circular No. (2/BS, IBS, IS, IIS, FS, IFS/465/2020) to all local banks, investment companies and finance companies concerning the discontinuation of receiving a number of forms by the direct line (Mainframe). THE EXECUTIVE DIRECTORS Muharram 13,1442 H September 01,2020 The General Manager, Circular No. (2/BS/IBS/IS/IIS/FS/IFS/465/2020) to all Local Banks, Investment Companies and Financing Companies Reference is made to the Central Bank of Kuwait Circular No. (2/BS/IBS/IS/IIS/97/2003) issued on 22/06/2003 regarding the Center of Risks System and Regulations for Implementation thereof, and the Circulars Nos. (BS, IS/101/1995) and (2/BS/IS/251/2009) issued on 21/06/1995 and 18/11/2009, respectively, regarding the maximum limits for credit concentration, and to the Instructions issued to conventional banks No. (2/BS/12/1997) on 04/10/1997 and the Instructions issued to Islamic banks No. (2/IBS/150/2003) dated 03/11/2003 regarding data of credit cards issued by local banks, we inform you of the following:

As of 1/9/2020, inquiry requests on Form AM 5, requests for passwords of
Identity Card on Form AM 1, personal accounts Form AM 1/A, customer write-off note on Form AM 4 via daily mail, statement of credit facilities on Form AM 2, Form AM 25 relating to the credit cards issued by local banks, and Forms AM 18, AM 19, AM 28 and AM 29 regarding credit concentrations and overlapping interests shall not be received via Mainframe. All entities must submit their inquiries about, and reporting of, all types of customers through the credit information network company (Ci-Net) system.
All entities must take into account the prompt entry of data of credit/financing
facilities (AM 2) in the Center of Risks System (Mainframe) for the period ended 31/08/2020 within the specified timeframe (10 working days) ending 14/09/2020. Accuracy of data entered should be ensured, as the system shall cease to be operative on 30/09/2020. Best Regards, The Executive Director, Supervision Sector Waleed Mahmoud Al-Awadhi

Maximum Limits for Credit Concentration

Lineage: In force