They said that private banks operate systems of the nineteenth century and called for the establishment of the Deposit Protection Company
BAGHDAD - Rahim al-Shammari
The member of the House of Representatives, Dr. Mahdi Al-Hafiz to look for effective solutions to the reality of the banking sector, especially private banks in Iraq because economic development is not only performed by Advanced banking system.
This came during a seminar hosted by the "Institute for the progress of the development policies" to discuss the relationship between private banks and the Central Bank of Iraq and participated in the seminar a group of financiers, economists and representatives of private banks.
He said Hafiz censorship, which is supposed central bank carried out is still weak and confused to large limits, noting that the dollar selling process by the central bank represent a sensitive issue for the citizen it is assumed that the process of converting amounts normal and easy way prevail as is prevalent in other countries.
He stressed the lack of separation between what exists in the banking sector transactions and the Central Bank and the corruption case in the state, noting that the decisions and orientations after 2003 was different than it is the case today, there was agreement about enabling the central bank to play a new role.
For his part, eating a banking expert conciliator Hassan Mahmoud through the paper presented at the symposium and the reality of the banking sector in the country and ways to promote it, indicating that this sector is a small sector marginal does not exceed its contribution to the gross domestic product of 1.5% and if we add to him the financial sector percentage rises to 1.75 % and it is facing the problem of the dominance of state banks to between 85-90% of the sector's assets, which hinders the development of private banks.
He explained that the annual report for financial stability for 2013 indicates that the sector's assets have reached at the end of the year a total of 208.8 trillion dinars, or about 77.4% of GDP, which is estimated by the same report estimated 269.6 trillion dinars the share of government banks, including 187.7 trillion dinars, or slightly less than 90% in the private sector's share stood at only 21.1 trillion, about only 10%.
He pointed to the diminutive credit relative to GDP as cash credit of all banks in 2013 reached an amount of 23.6 trillion dinars any rate not exceeding 8.7% of GDP in 2013 compared to 55% for the countries of the Middle East and North Africa and the share of government banks, including 72% while the share of the sector funds headers are only 19.5%.
He Mahmoud to a large disparity between the price of interest payable and receivable Interest rates on deposits ranging between 1-6% depending on the currencies and maturities in between interest rates on loans and banking facilities of all kinds between 10-15%, leaving a margin of about 9%, compared with only 5% in Middle East and North Africa countries, and this disparity between the credit interest rates and the city background historic began with deflationary monetary policy adopted by the central bank to combat the sharp inflation experienced by Iraq in the period 2006- 2010, which resorted to activate the traditional instruments of monetary policy by raising policy rates to high levels close to 20% per year and raise the interest on overnight and weekly and monthly deposit rates for banks have to what Atrah between 18-20%, as well as raise the deposit reserve to 20% instead of 15%.
He said Mahmoud to the existence of another problem facing the banking sector is faintly capital and other sources of funding, as funds operating in Iraq banks capital still combined do not meet the needs of development, the number of operating banks is 54 banks, including (7) state banks (30) banks including special (23) commercial banks, and (7) The Islamic banks, branches of foreign banks Fddha (17) branches. The central bank has put limits on minimum capital operating in Iraq banks, Reducing the minimum capital Bank of Iraq of non-government banks include up to 250 billion dinars, and the branches of foreign banks have started a minimum of 7 million dollars, and this lifted recently to ( 70) million.
Said Mahmoud said the total deposits with commercial banks stood at the end of 2013 amounted to 49.8 trillion dinars, equivalent to 18.5% of GDP, of which 40.5 trillion the government banks any 81.3% and the rest is a 9.3 trillion to the private banks which 18.7% of the total deposits This discrepancy is due to the state-owned banks on government deposits dominance after that prevented the Ministry of Finance government departments and institutions to maintain accounts or deposits with private banks, but what concerns us here is the distribution of these deposits between government banks and the private banks and the total private sector deposits with the device banking for 2013 amounted to 24.45 trillion we have, the share of government banks, including 14.61 trillion dinars, or 59.8%, while private banks received 9.83 trillion dinars at a rate of only 40.2% of private sector deposits.
He said Mahmoud to the small number of banking units compared to the number of population (bank density) as the number of branches totaled 1 030 branches as at the end of 2013, the branch per serving about 32 000 people, stressing that the banking sector fails to current Bhacleth due to a number of reasons, including weak and confusion in quite a few of the instructions issued by the Central Bank from time to time and then not soon be withdrawn or amends after a few days, as well as a decline in banking supervision efficiency and professionalism, but lack of seriousness, considering that these methods control the banks have not kept pace with the evolution of central banks developed countries and in neighboring countries, including preventive controls, in addition to the lack of the banking system to the corporate governance rules needed to monitor the performance of boards of directors and executive departments and verification of compliance with laws, regulations and instructions, and the lack of sector of the culture of banking risks and ways of evaluation and management and ways to mitigate or reduce them, Add to this the emergence of The boards of directors of departments of a bank is not related to the professional nor experience nor knowledge of banking work and do not have the qualifications of non-possession of a sudden financial fortunes hovering suspicions about its sources.
And between it and although there are multiple points of control talk about irregularities and corruption if you will not end up began, noting that among these actors of the Iraqi Central Bank - the Directorate General of banking and credit control as a regulator of the activity of banks.
And the competent organs of control and analysis of budgets in the Securities Commission - for banks listed on the market Audit Court, which verified the government banks accounts to the Audit Committee of the Council of the bank account management - compliance - external auditor in each bank - oversight services and internal inspection of each bank officer.
He spoke conciliator good for dollar selling by the Central Bank of Iraq window indicating that it thorny issue relate mainly to the functions of the Iraqi Central Bank monetary stability is no stability of the dinar exchange rate against foreign currencies is one of the most important duties, and this arduous and thorny task at the same time in a matter of Kalzerv prevailing in Iraq .
Iraqi Vdinar debt to the central bank and the right of the dinar bearer of this to ask the central bank disbursed the equivalent of dollars, but that this right should not be automatically and without accountability there is no doubt that the responsibility for verifying compliance with anti-money laundering law is the responsibility of each of the Central Bank and commercial banks alike, but it is the responsibility of the various economic security-related government agencies. He believes that the other face to satisfy the demand for the dollar is the depletion of foreign reserves, calling for a return to the style of letters of credit to finance imports and to stop the style of bank transfers by the commercial banks and the central bank can not know the sources Dnanerha while retaining the style of remittances to pay Akiem some food commodities perishables such as meat and poultry, vegetables and fruits that are issued to Iraq periodically agreements with importers deadlines for the payment of more or less (60-90 days), but he also said this does not preclude meeting the personal and family remittances legitimate requests for documents and supports enhanced legitimacy.
And this is achieved through a return to work vacations import issued by the Ministry of Commerce to be part of the documents open import credits claimed by the importer that these vacations are only for statistical purposes without quantitative restrictions to prevent them from becoming another source of corruption that.
And he demanded that the customs departments be more careful and the highest professional within the framework of matching commercial lists attached documents reliance with import license in terms of description of the goods and quantity has turned out after checking a lot of these documents lack authenticity of documents provided to the banks on the allegedly written by circles customs Lama rigging and corruption in circles customs itself or rigging the outside, and subdue the appropriation of more than a certain amount, say 250 000 dollars, for example, to examine the goods by the company closer supported in the port of export pre-loaded on a ship or aircraft, and coordination between the Council of Ministers and the Central Bank to agree on a minimum balance of currencies foreign maintained by the last long enough to cover imports for a number of months.
And ways to the advancement of the banking business, Mahmoud called for raising the efficiency and professionalism of the Superintendency of Banks of strengthening the central bank's capabilities in both sides of the balance sheets of banks and testing effort and commitment controls "Basel" on the one hand and tighten controls on banks regimes banking and instructions restrict the other hand, analysis, and tightening of sanctions the offending banks to the instructions and escalate their frequency in the event of bank failure to arrange conditions to conform with the regulations and instructions, noting that commercial interest rates charged by banks, prices do not encourage borrowing for investment purposes and it must find a way to support interest rates through the use of reserve deposits held by the central bank to lend bank interest and not 1% per year, for example, that the banks lend to small and medium enterprises prices developmental benefit of 4-5%, while the second step, from his point of view, require a political will capable to take drastic action and initiate laws which will eventually lead to a move away state from interfering in the domestic banking from it and the international activity through the privatization of all of the bank "Two Rivers" and "rational" and the liquidation of Trade Bank of Iraq in accordance with Bakannouna in the specified time frame, according to his rights and obligations, pointing out that the privatization of three state banks can contribute contribution is little to reduce budget deficit Great.
He pointed to the lack of a feature and advantage of dealing with these banks only feature a single which is the protection offered to the owners of deposits from the household sector and the business sector that this is what justifies its dominance of the private sector deposits, it accounts for 59.8 percent of private sector deposits (current and saving and fixed) with not given banks But to own (40.2%) of these deposits. But this protection will be provided by the Deposit Insurance Corporation as is the case in the rest of the world when the law found his way to the legislation, according to Mahmoud.
For his part, economic expert, Dr. Ahmed Alabreha said that the banking sector in Iraq file is one of the thorny issues, after 1984 directed the world on the principle of easing controls on financial institutions and continued it so, up to the recent global financial crisis and found that they sinned in ease of control and they discovered that the biggest institutions Finance exceeded on the bases and standards and rules of nice behavior through the files of corruption discovered.
And between Alabreha that one of the most important aspects of failure in Iraq is the government's inability to enforce the law and therefore, all witnessed by Iraq of sacrifices for freedom and democracy after 2003 as a result of the weakness of the law and the inability to impose the international reports free of classified Iraq as part of countries that enjoy democracy, stressing that the central bank alone is unable to impose control and assess the level of performance of the banks, this task is much greater than the bank whose primary responsibility is the ability of fiscal policy put a non-banking supervision and the development of controls and anti-money laundering and operations of central banking.
Alabreha He pointed out that the Superintendency of Banks is the task was added to the functions of the bank which is not a banking cash and as a policy has occurred mixing a clear policy in the task led to disastrous results, censorship needs to destinations has clout and the ability to strike with an iron fist, pointing out that the United Nations has recently introduced a circle Union called for Integrity, or the fight against corruption, and corruption means here Undersecretary for Thoroughbred betrayal, the government agent and the people authentic, and there is a new theory that the Iraqi the term (I Halih) This principle is the basis of corruption, and there are 80 international initiative to combat corruption, including not to deal with bribery issue is not cursing but the government is required from citizens not to pay a bribe to the employee or borrowing from the bank and does not meet the loan.
And see the appearance of Dr. Mohammed Saleh, the financial advisor to the Prime Minister, that the banking market is not homogenous, there are attracting clear of capital and deposits by government banks, which account for 90 per cent and 10 per cent for private banks and there is a disparity in the capital, adding that the government banks in Iraq late and private banks operate according to the nineteenth century Systems.
Saleh explained that adults who get a credit of 12 per cent and with each failure of banking transaction because of tripping is withdrawn 32 treatment ratio Banks civil very conservative in government banks is conservative and this is evident through the large loans granted by government banks size, basic banking operations and point illegal loans where the proportion rises to 40 percent. This means that the wake of the banking system is prevalent in Iraq evidenced by the high interest of up to 100 per cent and this is usury.
Saleh said the governance absent in the banking sector and of withholding data on what others result in negative governance or bad, and there's something dangerous in Iraq, which is being conducted outside the budget, a domestic trade of creating centers of profit separately and the loss of any work to maximize profits personal connection goes little to the institution and this point is extremely dangerous.
He spoke in favor of the currency auction file returned him an important and necessary, and wondered about the possibility that the creation of a bank to the private sector be of his duties and the centrality of the opening credits are gradually shift to cover imports? As part of the discussions that took place symposium Ali Tariq secretary private banks Association talked about the results of the banking conference organized by the Association recently, noting that the conference recommended strengthening and developing cooperation with the Central Bank of Iraq and the formation of a joint committee of the Central Bank and Ministry of Finance and the Association of Banks and members of the economic and financial to development Indeed, the banking and strengthen cooperation with government agencies to support private banks as well as carry out an awareness campaign about the role of banks in the development and the designation of a representative of the Association Council as an adviser in the Iraqi Central Bank administration.
Economic expert on behalf of Jamil Antoine expressed his appreciation for the great boldness in the IPO and address the problems away from the courtesy, calling for a review of prices of bank stocks.
He added that the banking system and because of the tremors suffered and withdraw large sums from banks and some of it was not the level of responsibility led to the shake citizen confidence in these banks, there are 77 per cent of the Iraqi currency outside banks, even if this size is present, we could finance the budget in Iraqi dinars, as well as the dollar deficit and this It was the result of wrong approach for banks and lack of monitoring and follow-up and the role of registered negative companies, referring to the issue of the lack of governance and absence of legislation in this regard and must reconsider these standards, while stressing the need to activate the control procedures by the central bank away from the courtesies.