Oil-rich Kuwait will bail out billions of dollars worth of bank loans taken out by nationals in the lead up to the global financial crisis.
The new repayments would not exceed 40 percent of a borrowers monthly income, financial and economic affairs committee chairman Yussef al-Zalzalah said, according to news agency AFP.
MPs claim banks violated lending rules during the period by charging higher interest and the Central Bank of Kuwait failed to apply the law.
Parliament is still considering a parallel proposal to give 1000 dinars (US$3500) to Kuwaitis who will not benefit from the scheme, which could cost an additional US$1.2 billion.
The government rejected a similar bill passed by parliament in January 2010, when the debt was worth at least $21.6 billion and the interest $5.2 billion.
The change in government position came amid a bitter political dispute in the emirate and after the election of a pro-government parliament in a December poll boycotted by the opposition, which has staged several street protests.