Foreign CurrencyThe Qatari Riyal is freely convertible on world financial markets. Currency exchange is regulated by Law No. 4/1982, which controls and sets licensing. In June 1980, the Riyal was pegged to the U.S. dollar at a rate of US$1=QR 3.64, which remains unaltered. The Riyal maintains a floating rate against all other currencies.
Restrictions exist on activities dealing with currency exchange, traveler's checks, precious metals and personal transfers.
Central BankThe Qatar Central Bank (QCB) was established in 1973 as the Qatar Monetary Agency. In addition to supervising, coordinating and controlling the banking sector, the QCB also regulates insurance and controls the circulation of currency. The QCB sets interest rates for deposits and credit facilities maintained in Qatari Riyals (QR). The Central Bank adheres to conservative policies aimed at maintaining steady economic growth and leading to a stable banking sector.
Commercial BanksThere are 14 commercial banks, with a total of 39 branches, operating in Qatar. These include two Islamic banks that were licensed in recent years. Six of the banks are Qatari-owned, two are Arab, and six are foreign banks.
A banking license may be issued to a banking entity whose paid-up capital is at least QR 5 million. If the banking entity is a foreign subsidiary, it must maintain that amount of retained or operational capital in Qatar. Banking entities are required to retain a reserve of 100 percent of their paid-up or operational capital in Qatar. Deposits and credit facilities in foreign currency are subject to variable interest rates determined by the banks in accordance with prevailing market terms.
Credit facilities are provided to local and foreign investors within the framework of standard international banking procedures. QCB guidelines require banks operating in Qatar to grant priority to Qataris and to public development projects in their financing operations. Banks operating in Qatar are also discouraged against foreign stock market operations.
© 2000 Mena Report (www.menareport.com )