The Monetary and Central Bank of Kuwait Law and the Organization of the Banking Profession No. 32 of 1968 referred to the prohibited activities of banks in Articles 66 to 70 of the law.
Prohibited business of banks
Carrying out Commerce and Industry
Banks are prohibited from engaging in trade or industry, or owning goods unless they have acquired them in payment of a debt to others, and provided that the bank sells the goods within one year from the date of their ownership.
Buying real estate
Banks are prohibited from buying real estate other than those they need to carry out their business or the residence of their employees, unless they have owned them in payment of a debt to them
Banks own or deal in their shares
Banks are prohibited from owning or dealing in their shares unless their ownership has been transferred to them in fulfillment of a debt owed to them by others, and they should sell these shares within two years from the date of their acquisition.
However, the Monetary Law, the Central Bank of Kuwait and the Organization of the Banking Profession permitted the banks to purchase for their own account the shares of other commercial companies within the limit of 50% of their own funds, and they may not exceed this limit except after obtaining a prior approval from the Central Bank.
It also allowed it to own shares and all other values kept with it in payment of a debt owed to it, and the bank, in this case, must liquidate them within two years from the date of its acquisition.
Granting loans to members of the bank’s board of directors
Banks are prohibited in any way from granting loans or advances to the current account or providing guarantees to members of their board of directors except with a prior authorization from the General Assembly. These loans, advances and guarantees shall be subject to the conditions and rules that the bank applies to others, and this prohibition does not include opening documentary credits.
Issuance of travelers cheques
No bank may issue travelers checks without obtaining a prior license from the Central Bank.
Appointing members to the board of directors without meeting the conditions that must be met by the candidates for that
Whoever is a member of the board of directors of a bank, or the head of the executive body of a bank, his deputies or his assistants, as well as to continue holding these positions, the following is required:
- He should not have been previously convicted of a crime involving moral turpitude or dishonesty
- He should not have declared bankruptcy
- He has not refrained from paying even once
- To be reputable
- To have sufficient experience in banking, financial or economic affairs in accordance with the rules and regulations issued by a decision of the Board of Directors of the Central Bank of Kuwait
- He should not be a member of the board of directors or an employee of another bank operating in the State of Kuwait
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