Jun 14 2011 |
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Qatar: Banks flouting interest cut face penalty
By MOBIN PANDIT & WAFA AHMED DOHA: Banks that have not yet reduced interest rates on personal loans as directed by the Qatar Central Bank ( QCB ) in its April 10 circular might soon face the music.A QCB source said yesterday that the inspection wing of the banking regulator was actively following up and making sure that all banks comply with the directive to reduce interest margins on personal loans to 6.5 percent.
"We hear that there are some banks that are not complying with the QCB diktat, but so far nobody has filed a complaint," the QCB source told The Peninsula.
However, many people have been complaining that their banks haven't informed them of any changes in the interest rates so far. Some banks have, though, slashed the rates and intimated their customers.
"It's normal for any individual or entity to violate a new rule in the beginning, and banks are no exception, but such non-compliance should be a temporary phenomenon," said the source.
Banking industry sources, meanwhile, say that some banks might be finding it hard to make complicated calculations and adjust the interest rates on existing loans due to large
customer size.
"The reduced interest rate is applicable to all the existing consumer loans only from April 10, so calculations can be tricky and time-consuming," said a source.
It takes time and tremendous effort to adjust interest rates on a huge number of loan accounts, so the delays might just be because of these technical reasons, said the source.
Some banks have, though, begun dispensing new loans on reduced interest rates based on the instructions of the QCB .
A number of bank customers say they keep wondering how the reduced interest burden on their loans would possibly reflect on the equated monthly instalments (EMIs) they are paying to service the debt.
Banking industry sources maintain that the EMIs are hard to be reworked and what could possibly be done is to reduce the EMIs. "If someone has to pay 24 EMIs, depending on the loan size, for instance, he might have to pay only 22 EMIs after the interest burden is reduced," the source explained.
© The Peninsula 2011
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