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Satyendra Pathak
Doha
Loans have become a little more expensive in Qatar as most of the banks have increased interest rates on personal and car loans by 0.25 percent from the beginning of the year.
The move comes following the decision of Qatar Central Bank (QCB) on December 15, 2016, to raise policy rates by 25 basis points.
The overnight lending rate by the QCB rose to 4.75 percent and the overnight deposit rate rose to 1 percent with immediate effect.
Most Qatari banks have also repriced their existing loans too. Customers will now have to pay a higher equated monthly instalment (EMI) to repay their loans.
Doha Bank has informed its existing and new loan holders that interest on personal loans would be raised by 0.25 percent from January 2, 2017, following the QCB's decision to raise lending rates to banks. With this hike, interest on personal loans on reducing rate has risen up to 6 percent.
Justifying the rate hike by the bank, Doha Bank Group CEO R Seerharaman said,"Net interest margins of the bank, which is the gap between its borrowing costs and lending prices, will increase marginally following a rate rise by the Qatar Central Bank. In such a situation, we need to reprice our loans."
Asked about the necessity for raising interest rate for the existing loan holders, Seetharaman said,"We have to do it as our borrowing cost this year will be higher than the last year. We have to follow the central bank."
The interest on various loans differs from person to person depending on the loan package, Seetharaman said, adding that the bank would ensure that interest on reducing rates on any kind of loans doesn't exceed 6 percent per annum in the current situation.
Doha-based Ahli Bank has also announced on its website that the interest rate on personal and auto loans for both Qataris and expatriates have been increased by 0.25 percent.
According to the bank's website, interest on personal and auto loans for Qataris with reducing rate has been increased from 4.5 to 4.75 percent per annum. For expatriates, the website says, interest rate on both personal and car loans has been increased from 6 percent to 6.25 percent per annum.
A senior official of the bank, however said, interest rates on various kinds of loans are negotiable depending on their size and package.
Enquires with Qatar National Bank (QNB) also revealed that the bank has raised interest on personal and car loans by 0.25 percent.
A bank official said the interest on personal loans, including insurance, has been raised from 5.5 percent to 5.75 percent for expatriates. For Qataris, interest on personal loans has increased from 4.5 percent to 4.75 percent.
Interest on car loans for expatriates have increased to 5 percent, the official said, adding that it was still much lower compared to other banks.
Interest rate on personal loans from Commercial Bank of Qatar (CBQ) has increased from 6 percent to 6.25 percent.
An official of the bank said,"The rate has been raised for existing loan customers as well. It is quite natural on the part of a bank to increase interest rates on loans when the central bank increases the lending rates. Banks have no other option, but to pass it on to the customers."
Enquires with Qatar Islamic Bank (QIB) and most other banks listed on Qatar Stock Exchange also revealed that they have raised interest on various kinds of loans.
Talking to Qatar Tribune, a number of bank officials said that the increase in interest rate on loans will have very little effect on the number of loan seekers as the raise was very minimal.
For expatriates, an official said, the interest rates on loans were still much lesser than what banks in their native countries offer.
Interest rate in Qatar averaged 4.77 percent from 2004 until 2016, reaching an all time high of 5.85 percent in May of 2006 and a record low of 1.53 percent in March of 2004.
In Qatar, where its currency is pegged to US dollar, interest rates decisions are taken by its central bank.
