The Executive Manager – Trade Finance at Kuwait Finance House (KFH), Rashed Almelhem said that the bank’s efforts to continue providing Letter of Credit services and appropriate finance channels and its experience in acting as the mediator between the supplier and the buyer, have resulted into a remarkable growth in the values of the LC related to the internal and foreign trade in 2020 and the first half of the current year.

AlMelhem stated, in a press release, that KFH, out of keenness to support commercial activities, companies, and SMEs, has not stopped providing its services and innovative solutions during the exceptional circumstances last year.

He reiterated KFH keenness to implement the latest IT applications at the trade finance department concerning the opening of LCs and LGs to facilitate procedures and enable customers to reach any place worldwide by providing a vast correspondent banking network through highly sophisticated communication systems.

AlMelhem mentioned that KFH has recently achieved remarkable success in launching the SWIFT Payment Controls service according to the highest security and quality standards. This service enables the bank to conduct a real time track the financial transfer stream directly with the advantage of notice and the ability to stop transferred payments and provide the user with daily reports on the transaction status.

Innovative Solutions

On the other hand, AlMelhem emphasized that KFH has come a long track record in offering innovative solutions and alternatives to finance foreign trade through LCs and sharia compliant finance solutions, thus overcoming several challenges encountered by the trade exchange process.

He added that “To ensure the achievement of an efficient performance, effective solutions, speed, and fulfillment of customer’s trade requirements, safety of merchandise, speed of timely trade exchange, the trade finance department team at KFH comprises highly qualified and trained staff holding accredited certificates in all fields of trade finance operations”.

KFH has continued to offer and develop finance channels to suite customers’ requirements and provide parallel trade relations. AlMelhem said that KFH has provided a variety of products to support the import/ export activity including on sight LC which provides a security factor for the merchants when importing their goods from abroad or when they get the supply inside Kuwait and the LC (on acceptance) which is a type of deferred payment credit. Payment to the foreign supplier is postponed after sending the merchandise or receipt of the cargo documents at certain agreed intervals. Also, it includes Murabaha refinanced credits according to which the merchandise is imported at the customer’s account. When the merchandise arrives, the customer will be able to purchase it from KFH against certain profit and settle the value on flexible instalments according to the customer’s cash inflows. Additionally, KFH provides the export credits product which contributes to the activation of the foreign export and supports local products. The export credit is given or endorsed in favor of the exporter in Kuwait upon instructions from the importer outside Kuwait and receipt of the value upon completion of the specifications of the exported merchandise.

Regarding the letters of guarantee, the bank issues different types of guarantees to suite the nature of each project, initial guarantees or performance guarantees, maintenance contracts, down payment, L/Gs regarding financial guarantee of corporate labor as well as telephone installations or traveling abroad for individuals. The bank provides the LC service (on collection) and act as a mediator who delivers to the customer documents relating to individuals or local Kuwaiti establishments as per the instructions of foreign parties.