Kuwait's lawmakers should not try to influence the Gulf Arab state's monetary policy as they seek to ease the burden of indebted citizens, the head of a syndicate representing commercial banks said.

The remarks of Abdul-Majeed al-Shatti, the head of the Union of Kuwaiti Banks, came after some parliamentarians called the central bank to cut the benchmark interest rate to reduce debt service charges.

MPs also pressed the government in December to buy banks' consumer loans portfolios estimated at about 4 billion dinars ($14.65 billion) to secure write offs.

'These proposals would damage the banking sector and hinder their activities,' Abdul-Majeed al-Shatti, head of the Union, told a conference of his association.

Asked to which proposals he was referring, Shatti said: 'Everything that intervenes with the authority of the central bank.'

The government has set up a 300 million dinar fund to help struggling debtors and avert MPs pressure for debt repayment but parliament was yet to approve the move. Some MPs have called the government to increase the size of the fund.

The central bank was in talks with the commercial banks on whether they can make a contribution to help indebted citizens by writing off some loans, bankers told Reuters in December.

In an effort to slow growth in lending, Kuwait has kept the benchmark interest rate banks use to set their lending rates unchanged since July 2006.

Inflation in the Middle East's fourth-largest oil exporter hit 6.2 percent in September, the fastest rate of price rises on record.

Kuwait dropped in May a peg of its dinar currency to the dollar and adopted a basket of currencies to lower the costs of non-dollar imports and fight inflation. - Reuters