Under Law No 13 of 2012 Qatar Central Bank and the Regulation of Financial Services, QCB is deemed an autonomous corporate body, with a capital of QAR50 bn (USD14.28 bn) and under the direct control of The Amir. It is headed by a governor appointed by The Amir, and primary goals include financial stability, supporting developmental activities and strengthening the national economy. The law is not just for banks, but includes insurance companies, exchange houses, Qatar Exchange and QFC‑registered entities. Decree No 27 of 2018 renewed the term of the Governor of QCB, HE Sheikh Abdulla bin Saoud Al Thani, for five years from June 2018.
Under Law No 13 of 2012, the Financial Stability and Risk Monitoring Committee shall study existing and future risks related to all banking, financial, insurance and stock market activities. The panel works closely with the Ministry of Finance to frame general policies.
The law provides strict penalties for anyone accepting deposits from the public without a valid licence from the banking regulator – violators can face a jail term of up to five years and/or a fine of up to QAR5 mn. For those refusing to accept the legal tender of Qatar, there is a jail term of three years and/or a fine of up to QAR5 mn. Issuing forged currency means 10 years in jail and/or a fine of QAR10 mn. Manipulating accounts incurs a prison term of up to three years and/or a fine of up to QAR200,000.
Regulations in 2013 curbed local banks’ investment options. Equities and bonds can account for up to 25% of a bank’s capital and reserves (previously 30%); debt issued by the government and national banks are exempt. The regulations also limit the amount banks can place with individual companies and unlisted securities: a maximum of 5% of capital and reserves for foreign investments and 10% domestically. The cap for total foreign equities is set at 15%.
Law No 20 of 2019 on combating money laundering and terrorism financing was issued in September 2019, replacing Law No 4 of 2010. The new law is in accordance with the latest international standards adopted by major international organisations including Financial Action Task Force, and highlights Qatar’s regional role in setting standards in its legal and regulatory framework for combating money laundering and terrorism financing.
The Qatar Renminbi Centre (QRC), which opened in 2015, is the first clearing centre in the region to offer Renminbi (RMB) clearing and settlement, increasing financial connectivity between China, Southwest Asia and the MENA region. The centre provides access to China’s onshore RMB and foreign exchange markets to local financial institutions – Chinese companies have become active partners in the Qatar market, and the RMB centre will facilitate trade via their agreement with QCB.
The Second Strategic Plan for Financial Sector Regulation 2017–2022
QCB, the QFC Regulatory Authority (QFCRA) and the Qatar Financial Markets Authority (QFMA) jointly launched in December 2017 the Second Strategic Plan 2017–2022 for the future of financial sector regulation in Qatar, an extension of the First Strategic Plan 2013–2016.
The new plan comprises five main goals:
Enhancing financial sector regulation and promoting regulatory cooperation.
Developing financial markets and fostering financial innovation.
Maintaining integrity of and confidence in the financial system.
Promoting financial inclusion and financial literacy.
Developing human capital.
The plan aims to create a regulatory framework allowing growth, is ‘inclusive and sustainable’, promotes innovation and financial technology (fintech), and successfully tackles cyber-security threats. qcb.gov.qa
Qatar Credit Bureau
Bad loans have been reduced since the Bureau started operations in 2011. The centre is not involved in the granting of credit facilities to individuals nor imposing any restrictions on banks. Access to customers’ creditworthiness is available only to institutions operating under QCB. Qatar Credit Bureau provides analytical data and supports banks’ use of advanced techniques in risk management, as well as support sustainable growth of credit in Qatar. It provides banks with information on customers’ total exposure in the market and the loans they hold, enabling banks to choose prospective customers. cb.gov.qa
Loans, Bank Charges and Interest Rates
Loans: Under QCB rules, a doubtful loan is one in which no monthly instalments have been paid for 180 days; a bad loan is one that has not been serviced for a year. Banks in Qatar have to closely monitor loan disbursement and forward reports on customer creditworthiness to QCB. There is also a duty to track and follow defaulting customers and seek resolution – if this fails, they will take legal action. Non‑payment of loans could lead to a travel ban for Qatar and possibly the GCC.
In 2011 QCB issued a circular imposing ceilings on the amounts a bank can lend as a personal loan both to citizens and expatriates. Banks cannot lend more than QAR400,000 as a personal loan to an expatriate, with a maximum repayment period of 48 months, against a maximum 50% of total monthly salary, and at a maximum 6.5% interest rate. Qatari citizens can have a maximum loan of QAR2 mn over a maximum 72 months. For car loans, banks can lend 80% of the car’s value.
Mortgages: Generally available – check with each bank for their individual requirements. Documents usually required: Valuation Report from an approved real estate agent; salary assignment letter if the home loan is the first facility with the bank; ID for Qataris or passport and valid residence card for expatriates; copy of the Title Deed and map; and building insurance cover. Discuss provision for life assurance against any loan amount taken and consider updating your will.
Bank charges: Banks must prominently display all interest rates on personal loans and credit cards, as well as publish them in local newspapers.
Credit cards: A maximum 12% annual interest rate can be charged. Cards can usually only be issued when customers transfer their salary or have an adequate deposit at the bank.
Interest rates: Announced by QCB on overnight deposit and loan transactions between QCB and local banks through the Qatar Money Market Rate Standing Facility (QMR), a monetary instrument through which local banks can request access to loan and deposit facilities with QCB at daily interest rates.
As there is fixed parity between the Qatari riyal and the US dollar, QCB short term interest rates policies are subordinated to the fixed exchange rate policy, making QCB overnight interest rates closely related to its USD counterpart, the Fed Funds Rate.
In March 2017 the overnight lending rate increased from 4.75% to 5%. The repo rate was changed in December 2017 from 2.25% to 2.5%.The deposit rate was raised in September 2018 by 25 basis points to 2.25%.
QCB and Bloomberg jointly launched the first Qatar interbank offer rate (QIBOR) fixing in 2012. This is the interest rate charged by banks in Qatar for interbank transactions.