Are banks crazy here in Qatar???

right buddy, I agree

Victory, Laymen often speak with so much confidence that I would take them for bankers and financial economists!

These are the banks internal process; which is difficult for any layman/outsiders to understand it conceptually :)

Thank you Victory making it even clearer. This is what I have been telling people.

I am just wondering why people opine about things they have no clue about.

Only under unavoidable circurmstances like overdrawn in daily interbank clearing positions, QCB charge overnight spot rate as interbank lendings with strict instruction to maintain sufficient balance in Current account.

Govt runs Development Banks such as IDBI in India, QIDB in Qatar to fund and support country's major projects.

QCB only collects and maintain Interest free Cash ratio balances account from commercial banks and earn interest to pay salaries to their staff.

QCB regulates Cash ratios to protect depositors confidence in the financial system and to regulate the economy.

painther, You haven't read my post carefully. Here is what I said "Central banks GENERALLY do not lend money to banks at any rate.. unless there is a programme to inject funds to the economy for open market operations."

I did not say that commercial banks CANNOT borrow money from the Central Banks. In a very few countries Central Banks lend money to banks for enacting monetary policy, this is where repo rate and reverse repo rate come into play. However, large number of countries have a system where banks use inter-bank borrowing instead of borrowing for Central Banks. In Qatar QCB does not lend money to commercial banks, but only in extraordinary circumstances. Reverse repo rate does not exist here.

Mathboy, commercial Banks can borrow money from central bank and rate is called Repo Rate (and vice versa, reverse repo-rate). It's incorrect to say they can't. However case here is that there is limit of borrowing (repo rate being less) so they have to get money from open market and then lend at highre rates.

To eu61's querry, banks pay 5% but charge more than that while lending. (remember car loans/ project financing/ personal loans etc)

The Cash Back promotion with the new credit cards from IBQ is real and yes, 5% of qualifying retail spend on the card is given back to our customer.

How it works: This is up to a maximum spend of QAR 100,000 per statement cycle, but not exceeding your assigned credit limit. You must spend a minimum of QAR 1,000 (retail) in order to benefit. The amount of cashback is evident on your monthly statement showing how much you’ve earned during that month, and the accumulated balance.

You can redeem after a monthly statement cycle or, as and when you choose bearing in mind that the cashback expires after 18 months.

If you have any questions or would like more information please don't hesitate to contact the IBQ 24 hour Call Centre on 447 8000.

does your friend quag never ever did a loan deferment?

like my uncle, he supposed to finish his personal loan this february, but the bank told him 4 more months...coz he has a 4x loan postponements.

"BRING IT ON DUDE!!!"

I'm sure the 5% interest they pay you isn't the same as the 5% you'd expect if you were borrowing it - i.e. the interest rates here aren't %APR's. They don't add up.

I'm not sure where the banks studied how to apply interest. A friends "fixed rate" car loan of 5% turned out to be about 10%APR!! Also they put the interest rate up to 9% without even informing him till he thought he was on the last payment. He went in to the bank an they told him he still had 6 more months to go, as the interest rate went up to 9% in the third month of his 36 month loan. They never told him. They never adjusted his monthly payment.

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8-10%, even if they pay 5% to you, they make profit. QCB rate is the base rate + prime lending rate applies when they accept deposits and provide loans.

eu61, good to see you learning.

ibq says 5% cash back. is this for real or any strings attached?

one thing i noticed in their brochure was that you have to spend a min of 1000qar per month to be eligible for this.

mathboy, was not yours. It was eby1975 post that make me doubt.

War looking for peace,

is like fornication looking for virginity.

eu61, It was because of my post you researched a little and found the answer, otherwise your first post is of a 4th grader.

Your research is still incomplete. You need to research more on why and when central banks lend money to commercial banks. Little knowledge and little information is dangerous, as it makes an old guy look a 10-year kid.

A hint: 0.5% is not what banks' margin is.

well people, at the end of the day, it's the bankers who run the world, and have for years. At the end of the day we're at their mercy anyway....

eby1975, Mismatched found.

QCBR for deposits 2%. Rate that Qatar Central bank pays to banks for money deposits on it.

QCBR for lending 5.5%. Rate that banks have to pay if they borrow the money from Qatar Central Bank.

So paying us 5% of interest for our deposits is saving the banks 0,5%.

It makes sense.

Sabrang, typical rate on personal loans is arond 8,5% (depending on conditions).

mathboy, your post was not very useful.

War looking for peace,

is like fornication looking for virginity.

Just curious, how much is the bank interest rate on personal or car loan? Should be more than 5%, right?

Guy The Bank will pay you Back once and you will pay them for years long..........

All Bank sucks... squeezes money from the customer in many ways... and some of the executives... really sucks... I went to open an Account with Al Nasser Branch of one of the leading bank on December 31, 2009. The lady on the customer care desk starred at me and told they r not allowing anyone to open an account on that day since it is the last day of a financial year. I again visited the same branch today (January 03, 2010). This time the executive was a Qatari guy. He was pretty busy with some of the customers and i waited for my chance. After dealing with those guys sitting in front of his table, he suddenly left the table. I waited for almost 40 min. then came the executive. I expressed my wish to open an account. I placed my application on his table together with the documents. To my surprise, he told me that the system is not working, its hanged up. Come tomorrow or day after or leave your application in the front window and we will let you know at the earliest. I got frustrated. I waited for some more time and to my surprise.. he started working with the hanging system... Turning back to the main window, i asked the security what could be the reason for such behavior. He smiled and replied. It is a normal course here Sir. Many customers are sent back with the same reason, and to be honest sir, this system never gets hanged. Its better to try with another branch... Hahahaha .....

This is what really a Customer Care.

Oh well was a wild shot in the dark anyway :P

Bad shot deepb. Banks can't do and won't do in any circumstances.

They might have a limit on the lending rate amount. And most of these banks must have exceeded them. Only reasonable guess.

Including you legal_pad!! If it was macroeconomics test...

All of them failed math!

"Something is mismatching here..." The missing link here is the knowledge how banking system functions. There are a few things you need to understand before raising this as an 'issue'. These are, Central Bank rates, Inter-bank borrowing and bank liquidity. Central banks generally do not lend money to banks at any rate.. unless there is a programme to inject funds to the economy for open market operations. The QCBR 2% you are referring to is something else.

Another thing to look at is banks' interest rates on their lending which is directly related to what they pay you on your deposits with them.

are u sure if the lending rate is 2%/year

Yep, I'm getting 5% with Commercial bank too :o)