Loan conditions for expatriates could be tightened

DOHA: Amid reports of impending reforms to the sponsorship law, banks here are preparing to tighten loan terms for expatriates.
A leading banker has revealed that banks have sought approval from the Qatar Central Bank (QCB) to toughen the conditions for providing personal loans to expatriates under a liberalized sponsorship and exit permit regime.
Discussions with the QCB are progressing, the banker said. Banks urge regulator to make it mandatory for expatriate loan seekers to provide Qatari collateral. Alternatively, expatriate loan applicants may be asked to provide a guarantor who would pledge to repay 50% of the loan amount in the event of default. The guarantor can be either a Qatari or an expatriate.
Some banks have already started requiring expatriates applying for a loan to provide a pledge from a Qatari guaranteeing repayment. Banking sector sources told Al Arab that a further tightening of lending conditions could lead to a serious decline in the banking sector’s credit portfolios.
However, speaking to the daily, Sheikh Fahad bin Fiasal Al Thani, deputy governor of the QCB, said banks cannot make individual decisions on loan terms.

He said the Central Bank would provide clarification regarding local banks’ concerns in a few days.
Sheikh Fahad added that some banks were taking “precautionary” measures in terms of lending to their expatriate clients amid reports of possible changes to existing rules on sponsorship and exit permits.
But it is too early for the banks to change policy, as the possible reform of the sponsorship and exit authorization rules was still in progress.
“Each bank can have its own risk management policies, but this should not be in contradiction with the Central Bank’s policy and its policy guidelines,” Sheikh Fahad said.
Abdulla Saleh Al Raisi, CEO of the Commercial Bank of Qatar, told the daily that local banks had indeed taken up the issue of expatriate loans with the QCB.
Among the suggestions put forward by the banking sector is also the need to cap the maximum loan period for expatriates according to their employment contract.

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