BY SACHIN KUMAR
Doha: Non-Qataris have outpaced Qataris in taking personal loans from banks.
Personal loans taken by expatriates grew by 36 percent to QR14.36m in December 2013 from QR10.6m in January 2013 whereas loans taken by Qataris rose 9 percent to QR26.82m in December from QR24.5m in January, according to Qatar Central Bank data.
Though the growth is higher in case of non-Qataris, the total amount of loans is higher in case of Qataris and shows that the ticket size of loan is bigger for Qataris.
Experts say rapid growth in the population of expatriates is one of the main reasons for surge in personal loans.
Low salaries and rising inflation have also forced non-Qataris to approach banks for personal loans.
“If one takes into account the demographic growth in Qatar, the growth of expat population far outstrips the growth of local population and this plays a major factor in the growth statistics for any sector or product,” said Niranjan Mendonca, Head of Retail Banking, Mashreq Qatar.
In Qatar’s population of over two million, expatriates predominate.
Last year the total population grew by around 7.5 percent. According to the Ministry of Development Planning and Statistics, the total population was 2m at the end of December 2013 up from 1.9m at the end of January 2013.
Another reason for high distribution of personal loans is lower interest rates.
Banks are charging 2-4 percent rates on personal loans which are lower than rates in other countries.
For example, banks in India charge 14-18 percent interest on personal loans. The differential encourages expatriates to take personal loans from banks in Qatar and buy assets back home.
“Expat customers see benefits from Qatar Central Bank capping rates for loans to avail short-term personal loans at cheaper rates to purchase property in their home countries without having the hassles of availing lengthy, expensive mortgage loans,” said Mendonca.
Bankers said banks get additional comfort to lend to expat customers due to Qatar Central Bank directives to extend loans only on the basis of a salary transfer, with repayments capped at a 50 percent of salary; and a comprehensive credit bureau that provides a 360 degree view of a customer’s borrowing profile, financial commitments and repayment history.
The Peninsula
