The Qatar Central Bank adopts a prudent and corrective supervision policy that aims to promote stability and soundness of the banking system by adopting the latest offsite and onsite supervision standards.

Basic Criteria of QCB Supervision Policy

The term "CRAFTE" reflects the supervision standards, upon which QCB bases its supervision policy. It stands for:

Corporate Governance   

Risk Management

Assets Quality                                                         

Financial Leverage and Capital Liquidity Management

Transparency                                                                                       

Earnings and Performance

Corporate Governance:

Corporate governance for banks and financial institutions entails formulating plans and policies, specifying authorities and responsibilities, adopting appropriate measures to attain proper conduct and sound performance of work at all administrative levels.

Towards achieving these objectives, QCB implements the following criteria: 

-Construction of organization charts that assists board of directors in assigning their authority and responsibility.

-Formulation of policies, plans, and strategies for banks and financial institutions.

-Activating the role of the board of directors.

-Identification of acceptable risks to banking and financial activities.

-Construction of organization chart for executive management and activation of their roles.

-Construction of organization chart for executive committees and activation of their roles.

-Adoption of appropriate and effective systems for auditing and internal control.

-Applying transparency principle at work.

-Adoption of an effective reporting system on the performance of departments and divisions.

Risk Management: 

Risk management aims at identifying expected risks, and setting plans to minimize them through the following: 

-Implementing risk management strategies.

-Identifying, and following up with different expected risks.

-Constructing organization chart for risk management.

-Implementing capital adequacy criteria of Basel II accord.

Asset Quality:

Bank asset quality is based on effective assets management, particularly, credit facilities management. Asset quality can be realized through applying the following standards:

-Adopting strategies and policies appropriate for spreading risks.

-Evaluating components and trends of asset portfolios.

-Measuring asset concentration, in particular, credit concentrations.

-Evaluating assets rating and allocating sufficient provisions for them.

Financial Leverage, and Capital and Liquidity Management:

Bank obtaining loan to increase profit is referred to as bank financial leverage. It is measured by loans to equities ratio. Financial leverage is an indicator of risks facing banks upon any sudden demand on deposits. As such, banks should consider indicators and standards necessary for maintaining adequate liquidity. Such standards are: 

-Specifying leverage limits.

-Adopting measurements for financial responsibility assigned to deal with adequate liquidity.

-Assuring the ability to increase capital when necessary.

-Maintenance of adequate liquidity ratio.

Transparency:

Transparency is a major task of the bank and constitutes a major responsibility on the part of its management. As such, banks must be responsible for transparent and accurate information, and assure the availability of such information at the appropriate time for the shareholders, concerned parties, and relevant entities working in the field of evaluation and estimation of risks.

Earnings and Performance: 

Profit making reflects sound performance of the bank’s management and its success in building a variety of investments channels and assets, which limits exposure to risks and increases profitability. These could be realized through the following: 

-Sound asset management.

-High and stable revenues.

-Diversification of revenue.

QCB Approach to Supervision

All banks and other financial institutions operating in Qatar are subject to the supervision and control of QCB through onsite and offsite supervision procedures in accordance with international supervision standards as summarized below:

1. Offsite Supervision:

The offsite supervision staff at QCB is provided with financial statements and periodical reports on banks and other financial institutions performances in order to; evaluate, estimate, and analyze risks associated with their conducts and performances. It also deals with violations of supervision regulations and exceeding ratios and limits set by QCB, and takes necessary corrective measures.

2. Onsite Supervision:

QCB’s inspectors pay onsite visits to banks and financial institutions, aiming at inspecting the accuracy of financial data and periodical reports submitted to QCB. Necessary corrective measures and procedures are taken in case violations or breaches of supervision regulations are detected. The periodicity of onsite visits by QCB supervisors differs from financial institution to another depending on their risk rating.

3. Supervision Affairs and Support:

QCB’s supervision affairs and support staff conduct studies related to banking risks and new development in this field, and upon which make recommendations to develop QCB supervision policy. The staff also reviews, analyzes, and conducts feasibility studies of applications for licensing, document keeping, and other related banking affairs.