CBK Restricts The Use Of Structures Built On State-Owned Land As Collateral

Introduction

On 9 August 2026, the Central Bank of Kuwait (“CBK“) issued Circular No. 2/105/ addressed to all local banks, investment companies, and finance companies (the “Circular”). The Circular directs that plots of land established on state-owned property shall not be relied upon as collateral against credit facilities or financing operations, and shall not be included among collateral counted for the purposes of meeting regulatory requirements in periodic reports. The Circular further instructs institutions currently holding such collateral to reassess the relevant facilities and consider requiring additional acceptable guarantees.

While the Circular’s text refers to “plots of land established on state-owned property,” based on our discussions with the CBK, the intent of this Circular extends further: it is designed to stop the practice of lenders accepting mortgages over buildings and structures erected on state-owned land by usufruct licensees or lessees. A school of thought