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“Fines” ignite controversy regarding the central bank’s policies with banks
Economical 2023/06/06
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: Shukran Al-Fatlawi
The controversy escalated between experts and specialists in financial matters regarding the central bank's imposition of fines on banks, as some of them supported this step, while another rejected it and described it as a retaliatory and inflexible policy that negatively affects the performance of banks.
The Central Bank recently imposed financial fines on banks for non-compliance with the instructions, amounting to more than 34 billion dinars for the first quarter of this year, in addition to issuing warnings and warnings.
The economist, Dr. Mustafa Hantoush, told Al-Sabah: Increasing fines on banks is an inflexible policy by the Central Bank, as it is imposed for several reasons and does not fall even after its causes are exceeded. 34 billion dinars is more like a retaliatory or collection policy than a performance regulation policy.
Hantoush noted that banks have begun to fear dealing with citizens and conducting banking transactions, and thus their capabilities have declined, as they have become content with some businesses to achieve profit without going for banking expansion. He added that banks at the present time do not have the ability to attract the monetary mass, as more than 70 percent of the cash is still hoarded, because dealing with depositors requires several things and methods of dealing, foremost of which is the flexibility that is not currently available due to the recent policies of the Central Bank. The process of abandoning banks and accessing depositors’ money.
Hantoush emphasized that failure to attract and recycle deposits forces the country to print dinars, and thus an inflation process occurs, even though the dinar is equivalent to the dollar.
He added that the Central Bank is required to reconsider its policies towards banks and to move towards reducing fines and giving an opportunity to evaluate their performance.
The head of the Association of Investors in the Iraq Stock Exchange, Alaa al-Moussawi, criticized the Central Bank for increasing fines for banks, which affects the profitability of investors in their shares, and pointed out that the amount of fines is a very large number and affects the profitability of banks and small investors in the Iraqi Stock Exchange. For his part, Economist Dr. Adnan Bahia told Al-Sabah that private and private banks are supposed to be part of the private sector that contributes to development, and they have entitlements such as paying delay fines, paying taxes on remittances, as well as taxes on investing depositors' money.
He added that banks should be a real contributor to the development process, and not a part of storing or trading private funds, stressing the importance of the process of paying fines to the Ministry of Finance and the government by banks and being a contributing part to more revenues for the budget.
Edited by: Ali Mouafaq
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