Impact of liquidity requirements imposed by the central bank of Kuwait on the zakat base of the Islamic banks

Abstract EN

Among the instructions issued by the Central Bank of Kuwait to Islamic banks in the State of Kuwait are the ones related to liquidity restrictions, which obligate banks to deposit a percentage of their cash liquidity with the Central Bank.

Part of this liquidity is not allowed to be disposed of by the bank as long as the bank’s license is valid.

Another part is allowed to be disposed of by the bank in specific cases according to certain regulatory requirements.

The balance of this liquidity in the State of Kuwait reached (2,830,699,000) by the end of the fiscal year on December 31, 2021.

The present study discusses whether the Islamic banks recognize this liquidity in their zakat base.

The need for this study stems from the fact that this liquidity is problematic regarding the bank’s full ownership of it due to the bank’s inability to dispose of it in certain cases, although growth is sustained in it.

This issue was not singled out in an in-depth theological study through linking it to the relevant regulatory requirements.

The study concluded that part of these balances cannot be disposed of by the bank, so zakat is not obligatory in it.

Another part can be disposed of on certain conditions so that it remains on its original status subject to the obligatory zakat.