Qatar Central Bank filephoto
The Qatar Central Bank (QCB) has not failed to carry out its duties entrusted to it in light of the new conditions imposed by the outbreak of the coronavirus pandemic within Qatar. In the past two weeks, the bank has done what is necessary to ensure the stability of the banking system in the country, in implementation of the directives of His Highness the Amir and his rational government, and in support of the decisions issued by the Supreme Committee for Crisis Management.
In order to understand the truth of what happened, we return to the sublime decisions announced by His Highness on March 16 to find that the second decision was related to the Central Bank, where he specifically directed his undertaking to put in place the appropriate mechanism to encourage banks to postpone payments within six months, with a period of six months, The third decision - Qatar Development Bank to postpone installments for all borrowers for a period of six months.
Although the bank had issued a circular on March 4 as part of its periodic review of its monetary policy, it reduced the deposit and repo interest rates by 50 basis points each, and reduced the lending interest rate by 75 basis points, but the bank returned again on March 16 - in implementation For Emiri directives - by making new cuts, the deposit and repo rates were reduced by another 50 basis points to only 1 percent each, and the bank lending interest from the bank was reduced by 1 percent to 2.5 percent.
Then, on March 25, the Qatar Central Bank issued a press release regarding the procedures for the sectors affected by the decisions issued in the face of the crisis. The statement said that the bank’s governor has hastened to hold a series of meetings with the executive heads of national banks, and directed to facilitate all transactions of the private sector, and work to address the problems related to the sectors affected by it due to the outbreak of the epidemic, especially small and medium-sized companies.
In the aforementioned press release, the bank directed the following: -
• Postponing the payment of loan installments, and the benefits or returns resulting from it - to those who wish - from the affected private sectors - which were covered by the decisions of the Supreme Committee for Crisis Management, for a period of 6 months, starting on March 16. Of course, the loans referred to, and the payment of their installments, are not allowed to include other loans, such as personal loans granted by the salary guarantee, as long as the borrower’s salary has not stopped. The postponement of the payment of premiums and the benefits arising therefrom does not necessarily extend to activities that were not affected by the crisis, and continued in its work without interruption, or increased its activities such as pharmacies, hospitals or restaurants, or that these loans were invested in investments outside Qatar. Hence, the text of the statement specifically came to the expression “whoever requests postponement”, meaning that the requesting party must have a justification for postponing the payment.
• Allocate a special repo window for banks to be at zero interest rate, not 1% as in other repo transactions, and the funds for this window are used by banks to postpone loan installments - to whomever requests - or to grant new bank loans. This is because activities that have been damaged by stopping their work, and have obligations for their employees and rents, can benefit from this window, and obtain new soft loans for a period of six months, at a rate of only 1.5%, without guarantees.
• Cancellation of POS fees, and ATM withdrawal fees.
Some people may ask why the benefits of these loans and their installments are not dropped from the activities affected by the crisis, as it is covered by government support from the amount of 75 billion riyals that His Highness the Emir addressed. In my estimation, this matter needs some time, and the Supreme Committee for Crisis Management will consider it a month from now in light of what will be clear from the effects of the crisis on those affected by the reality of what will be issued by banking reports in April, which is - that is, the committee - who will decide the mechanism that will be It is required to pay the amounts due, not the Qatar Central Bank.
On the other hand, it is necessary to pay tribute to other efforts made by the Qatar Central Bank in the face of the outbreak of the Corona pandemic, including the exchange of new banknotes for banks for use in ATM units instead of old currencies, and to stress to banks not to fill the ATMs with old currencies, and exchange them from the bank Central. The bank also issued another circular urging the implementation of internal and external transfers electronically over the Internet, with the closure of exchange shops to avoid the possibility of transmission of infection.
