Posted Today, 12:52 AM
Point the importance of credit in economic development
BAGHDAD - Hussein al-Tamimi Tgb
hiring bank loans to support the local economy is an urgent need in the coming period, requiring it rational management and high transparency describes the channels spending that accompanied the lending process, as well as monitor the implementation of the goals that have been proposed for it. That's what started him talk, Director General of the Bank of Mesopotamia Abdul Hussein Mundhiri said »Sabah»: The economic sectors rely heavily on bank loans to finance its various flourished individual projects and small businesses have become very significant due to loans obtained from banks, employed properly which resulted in big profits reflected on the financial positions of these companies.
added Mundhiri in an interview »Sabah»: The use of bank loans is a double-edged sword can either check the goals of economic projects through the recruitment of good funds, which must be Zinni would manage then companies realized profits and expanding continuously. But in the event of failure going with bank loans and turn into losses and then incur borrowers guarantees extended to banks to meet these loans are influenced by their financial positions as if it did not behave this loan form thoughtful and up the case to liquidation and bankruptcy.
pointed out that local banks Baktaiha public and private progress since The established several decades ago diversified banking facilities to individuals and businesses and by which established factories, shops and small projects absorbed a large number of skilled labor and unskilled handled situations of poverty and unemployment. He said that is noticeable through personal experience that some of the loans and advances taken used for purposes other than which was awarded for her, including, for example industrial loans as reflected in the stop factories for production and thus the deterioration of the industrial sector and the demobilization of a large number of manpower in addition to the entry of banks with borrowers claims lawsuit Because of the slow legal process., and pointed out that this faltering in payment impact also on the profits of banks and that the presence of the instructions had to banks put allowances are deducted from profits to meet these debts.
said Mundhiri that bank loans multiple types, including retail loans are used for personal purposes are of amounts relatively small and intermediate loans to individual entrepreneurs and small businesses which amounts do not exceed the 20 million dinars, and extended repayment often than 3 5 years.
He added: There are large loans long term given to large companies that possess substantial asset and want to expand their business and that the banks to study the conditions of these companies and their ability to repay and this imposes on corporate borrowers to provide a feasibility study about the need for economic expansion and the role of the loan to contribute to this development and the amount of cash it will get companies to pay premiums determined central banks ceilings of certain banks to be used in the granting of loans to the not to exceed eight weakening of capital and reserves special and beyond the banks this ratio would be subjected to harsh penalties because such grants have been offered depositors' money at risk.
And that often exposed banks to the financial collapses and bankruptcies due to collateral-free loans controls is well researched and guarantees weak or their expansion lending to third parties for Atsthakha That exposure the world into a financial crisis in 2008 due to excessive granting of mortgage loans in the United States, which caused an increase in display real estate for the actual need dropped their prices and stop borrowers for repayment and stopped with insurance companies that have been locked for these loans.
increased, since local banks in Europe, Asia and South America invest their money in U.S. banks, they are also exposed to losses due to the collapse and bankruptcy of banks, which they invest then and then collapsed the global financial system as a whole because it is a spider's web by globalization and the reason, as we have made clear is the excessive granting of bank loans to the sector and one in the absence of effective monitoring on the banks in particular and financial markets in general and the complicity of the international rating institutions with banks and insurance companies.