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Posted On: 27 May 2009 09:51 am
Updated On: 12 November 2020 02:09 pm

Banks likely to relax curbs on retail loans

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Having been on the defensive for months since the world economic slowdown began late last year, bankers here now say consumer spending must rise to repulse the simmering fallout of recession. Figures confirm Qatari bank lending fell seven percent in the first two months of the current year as credit to the public sector dropped 36 percent, wire agencies reported yesterday quoting central bank figures. Bankers, while expressing concern, said they expected consumer lending to also have taken a beating, and added that if the trend continued it could affect economic growth. The most effective way to at least ensure people spend the way they did before the onset of the global recession is for the banks to increase consumer lending, said a banker asking not to be named. So, there is growing realisation among some banks here that personal lending norms that have been made stricter in the current recessionary environment should be made somewhat lenient. “Since retail loans are a major segment of a bank’s overall lending portfolio, it cannot be ignored. Hence sooner rather than later, you may see the lending norms easing,” a banker said asking not to be identified. “How long can you hold on,” he wondered. Even in the US which is suffering a major brunt of the recession having been its originator, people are back to spending more, said the banker. In Qatar, default has not been a problem at all, although its rate might have risen in the current recessionary environment. “There is no default problem in Qatar due to close monitoring of the banking system by the regulators, the central bank,” said Nabil Nakhle, a senior banker from IBQ. He said in remarks to this newspaper: “We are giving away personal loans.” Nakhle, however, added that a borrower’s salary and the company for which he worked were the criteria for loan disbursal. “It really depends on which company you work for and what is your salary if you wish to access a personal loan,” he added. Yet another banker also said he saw the strict lending regime easing as it was becoming clearer by the day that recession had little impact on the Qatari economy and more liquidity was gushing into the banking system due to the recent state support. “I think the banks here cannot afford to be so strict with their lending norms as some of them have been since the recession,” he remarked.