DOHA: Beginning April 10 this year, no bank in the country is allowed to issue credit card to a customer without salary transfer.
To get a credit card, a customer must either transfer his or her salary to a bank or have 'adequate' deposits in the bank.
A credit card that has already been issued by a bank to a person without salary transfer cannot be renewed after its validity expires.
The upper limit on cash withdrawals using a credit card has been set at twice the gross monthly salary of the holder.
The above ceiling is applicable to both citizens and expatriates, according to the Qatar Central Bank (QCB) which issued a circular to all the banks on April 10.
The seven-page circular (Number 36/2011) in Arabic is signed by the Governor of the QCB, and the directives therein, regarding personal loans, Islamic financing and credit cards, are effective from the date of issue.
The interest rate applicable to credit cards has been fixed at one percent a month and 0.25 percent on outstanding arrears, if any.
All banks have been directed to prominently display interest rates on personal loans and credit cards in their premises as also publish them in local newspapers.
As for new personal loans, a bank must sign a contract with the borrower and the interest rate and all other terms and conditions are to be mentioned therein.
No bank is permitted to ask a customer seeking personal loan to sign one or several post-dated cheques either for the total value of the loan, for equated monthly installments or for any other amount. A loan must be repaid in installments from the salary of a customer which is transferred to the bank.
Banks cannot charge more than 1.5 percent over and above the QCB lending rate (which is currently five percent) on personal loans that they give away with effect from April 10. The interest rate works out to 6.5 percent.
All banks must accordingly reduce the interest rate on existing personal loans to 6.5 percent and on credit cards to one percent monthly with effect from April 10.
A bank can increase the interest rate on a personal loan only after the QCB raises its lending rate. Similarly, when the QCB reduces its lending rate, the bank must reduce the interest rate on personal loans.
A bank can reschedule (top off) a personal loan but it must do it in such a way that the total loan amount does not exceed the upper limits (QR400,000 in case of expatriates and QR2m for nationals).
The cap on the tenure of a loan (six years for nationals and four years for expatriates) is also to be kept in mind while rescheduling a loan.
Before giving a personal loan, a bank needs to get details about the applicant's financial commitments from the Qatar Credit Information Centre, suggests the circular.
All the banks are required to submit by May 10 this year all the details about personal loans to the QCB. Failure by a bank to comply with the circular would attract punitive action, the QCB said.
© The Peninsula 2011
