QCB issued a package of instructions for financial institutions operating in the State of Qatar to ease the impact of COVID-19 outbreak. The package of instructions cover guidance on business continuity plans, repayment of loan installments, national guarantee program, management of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) risks, and certain other areas of concern. QCB also published a presentation on procedures to combat the risk of COVID-19 pandemic.
Repayment of Loan Installments
All banks and finance companies that operate in Qatar shall postpone the repayment of loan installments due and interest/returns on those loans for the affected sectors, for a period of six months from March 16, 2020, for desiring customers with low interest/return and without charging any commissions or delayed fees and without any adverse impact on their credit rating. A repurchase window (repo) with an amount of QAR 50 billion, at a zero interest rate, has been a;sp allocated for providing liquidity to banks at zero cost. This will enable banks to commit to reducing the interest/return rate for customers of the affected sectors and for those who benefit from the decision to postpone repayment and the sanctioning of new loans without fees or commissions to clients of the affected sectors with an interest/interest rate not exceeding 1.5%. This is in case these loans are repriced after the end of a period of six months as from March 16, 2020 or the end of the repo facilities or by a notice from QCB, whichever being announced first. These instructions are effective as from the issuance date.
National Guarantee Program to Support Private Sector
In response to the COVID-19 outbreak, QCB decided to launch a national guarantee program to support private-sector companies affected by the current conditions to enable them to obtain the necessary and immediate finance needed to pay the salaries to their employees and pay rents, if any. Qatar Development Bank will manage the National Guarantee Program to support the private sector and issue the related guidance in this regard. According to the national guarantee program, the concerned banks must accept the finance applications submitted to them by beneficiary companies and the benefits shall be granted according to the following conditions and guarantees:
- The maximum funding limit for a single company and its group of subsidiaries is QAR 7.5 million, payable over three months, with a maximum of QAR 2.5 million per month.
- The provision is for a guarantee of 100% of the total financing by the Qatar Development Bank on behalf of the Government of Qatar, without the relevant banks bearing any fees or commissions.
- Finance is to be paid over a maximum of three years, starting from the last installment of finance, so that the first year will be a grace period.
In addition, the following conditions have been specified for how banks can calculate interest or return on balance of the finance:
- At a rate not exceeding 1.5% for the first six months (the grace period) to be paid by Qatar Development Bank and borne by the government of the State of Qatar. during the second half of the first year (grace period)
- During the second half of the first year (grace period), the interest is calculated at a rate not exceeding (1% + QCB Lending Rate) from which the Qatar Development Bank pays a value of 1.5% and is borne by the government of the State of Qatar and any excess over 1.5% shall be paid by the customer.
- During the remaining two years, at a rate not exceeding (2% + QCB Lending Rate) borne by the customer and paid with monthly installments.
Keywords: Middle East and Africa, Qatar, COVID-19, Banking, AML/CFT, Credit Risk, Loan Guarantee Loan Moratorium QCB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleHKMA Publishes Second Issue of Regtech Watch Newsletter
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.
FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).
EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.