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 ArticleBIS on Impact of Increasing Use of Cloud Technology on Cyber Risk
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.