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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Reforming the banking sector in the vision of the Prime Minister and the Central Bank

    Rocky
    Rocky
    Rocky
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    • Post n°1

    Reforming the banking sector in the vision of the Prime Minister and the Central Bank Empty Reforming the banking sector in the vision of the Prime Minister and the Central Bank

    Post by Rocky Sun 07 May 2023, 4:49 am

    Reforming the banking sector in the vision of the Prime Minister and the Central Bank

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    In his answer to the government's vision and program for financial and banking reform, the Prime Minister indicated, when hosting him in the Iraq Forum, the weakness of the government and private banking sector.
    He emphasized the role of the government and the new administration of the central bank in controlling the exchange rate of the dinar and its recovery against the US dollar and returning it to the point of balance in the foreign currency trading market. Great work challenges and obstacles for reasons related to the unstable economic situation and self-inflicted reasons borne by banks in terms of managing banking work, weak activity, and the lack of services and products that they provide to the public. And banking services related to contributing to economic development and achieving economic growth through the basic activity of banks, which is financing, investing, attracting deposits, granting cash credit, opening documentary credits, issuing internal and external transfers, and financing projects.Small and medium-sized enterprises relying on their own financial capabilities, but their reliance was mainly on the Central Bank’s initiative to finance small and medium enterprises. Thus, the activity of these banks was limited to participating in the currency sale window that the Central Bank carries out daily in what is known as monetary sterilization, with the aim of providing the Iraqi dinar to the Ministry of Finance, and covering trade And with the aim of maintaining the stability of the exchange rate of the Iraqi dinar against the US dollar, which helped banks obtain guaranteed financial returns due to the difference between the official price of the dollar and the parallel market rate.
    In order for banks to be stimulated and empowered, in accordance with paragraph 7 of Article Twelve of the government curriculum and the Central Bank’s plan to reform and develop banks, to carry out their duties stipulated in the Banking Law and the instructions and guiding and executive regulations in force issued by the Central Bank in accordance with the new strategic features to re-evaluate the stages that banking work has gone through. According to the vision of the new administration, it adopts the evaluation, classification and reform of banks, which contributes to their regularity in the global financial and banking system, by adhering to international standards in combating money laundering and compliance, and adopting discreet correspondent banks for commercial and financial mediation between importers and exporters (the ultimate and real beneficiary).
    And that applying and serving the national economy and customers requires strengthening and accelerating the steps towards issuing the national strategy for lending, launching the financial inclusion strategy, initiating the implementation of infrastructure projects for the implementation of development projects for electronic payment, and the transition from the cash society to the non-cash society according to a specific period of time, and since the implementing agencies of policies and plans The central bank is the banks, so it requires taking the necessary steps to re-review, evaluate, and classify private banks and restructure government banks according to previously prepared studies with specialized international organizations. It must be noted that there are special international standards for the classification of central banks agreed upon in most countries, such as controlling inflation and growth Economic, monetary stability, independence and the extent to which economic goals are achieved.
    And because central banks are subject to classification and since they are the ones that monitor and supervise banks, then the classification of banks must be in accordance with international standard standards approved in most countries and by accredited international rating agencies, and focus on banks that have not been rated yet and they constitute the large percentage that exceeds 70% of the total number of banks, as well as rehabilitating troubled banks by merging or liquidating them.
    We propose here to create a department or division in the overall quality management of financial analysis and evaluation of banks by adopting standard accounting standards for the quarterly, semi-annual and annual evaluation in addition to what is currently in force in the international classification (CAMELS), which is based on the evaluation and classification on the criteria of capital, assets, liquidity, profitability and risk management, but In view of the specificity of the banking business in Iraq, it is required to assign the department proposed to be created to carry out re-evaluation and classification by adopting additional standard criteria that are consistent with the Iraqi reality, such as approving the business results of banks and final accounts, and focusing on analyzing assets, revenues, expenses, capital adequacy, indicators of money employment, cash credit granted, its sectoral distribution, and the return-to-return ratio. The capital, the return on assets, the liquidity ratio, and the extent to which banks adhere to the banking instructions in force, and in particular the commitment to the Central Bank’s initiative to finance small and medium enterprises, and not deviate from their basic objectives.And the collection of non-performing debts and compliance with the Basel II and III agreement and the management of credit, liquidity, operational and market risks.
    Another important note that must be clarified is the weakness of the banks’ capital, which led to a shortage of their savings, weak liquidity and credit capacity - assuming that the bank has completed the minimum capital, which is 250 billion dinars, noting that some of their capitals have been eroded due to the problems of managing their credits. The proposal in this case is not only to work on re-evaluating or completing its capital, but rather to raise its minimum to at least 50% of its current capital by a decision of the Board of Directors of the Central Bank, and that this step will enable it to restructure it, increase its savings and enhance its credit capacity because our economy There is a need for large banks that activate the economic cycle, move the credit activity, and be managed by a professional banking administration that is independent of its owners, according to the modern concept of banking management.
    The central bank can give good banks an appropriate period to gradually boost their capital.


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    Added 05/07/2023 - 10:21 AM


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