Citizens complain about banks, and a banking expert confirms: Iraqis are slaves to loans

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[size=52]Citizens complain about banks, and a banking expert confirms: Iraqis are slaves to loans[/size]

[size=45]Zulfikar Yusuf[/size]
[size=45]Citizen Ali Muhammad gets angry whenever it comes to his salary. Although his monthly salary is about one million Iraqi dinars, half of it was deducted due to him receiving a loan from a bank. This was not the only thing that made Ali angry, as the loan interest prolongs the possibility of him paying the amount, according to what he said. When will I get rid of this “enslavement”?[/size]
[size=45]Ordeal Grant[/size]
[size=45]Citizens criticized the policies of Iraqi governmental and private banks and accused them of manipulating their lives through the interest generated on loans, which they considered did not help in achieving the purpose, while economic specialists described the mechanism for granting advances and loans in Iraq as “the worst” among the countries of the world.[/size]
[size=45]Many government and private banks in the country compete brutally to grant loans and issue their instructions without extensive study to verify the feasibility of these loans to serve the citizen, while specialists confirmed that the services provided by the banks are far from naming them completely, because they are an ordeal for the citizen, especially those with limited income.[/size]
[size=45]Balance control[/size]
[size=45]Rafidain Bank, in turn, took into account the government’s decision to change the pattern of its services in terms of loan interests, as in a statement received by (Al Mada), it “adopted the decreasing interest method on all loans to individuals and institutions since the beginning of 2024 instead of the fixed interest method that was previously in effect.” Pointing out, “This is a measure aimed at ensuring the provision of the best services to all segments of society.”[/size]
[size=45]As for the Parliamentary Finance Committee, it tries from time to time to host officials at the Central Bank and general managers of banks to discuss the mechanism for granting loans, interest, and the repayment period, provided that the interest is decreasing.[/size]
[size=45]Member of the Parliamentary Finance Committee, Mustafa Al-Karaawi, explained that “the measures taken to monitor the work of banks are governmental and not parliamentary, given that banks are linked to the Central Bank financially and to the Ministry of Finance administratively, and therefore the monetary policy is drawn up by the government.” Pointing out, “We propose that there be a balance in providing services to citizens and at the same time developing the remaining banks as an important banking sector. Whenever it develops, it gives strength to the banking economy in the country.” Al-Karawi calls for “there to be no blackmail or pressure on the citizen regarding the provision of services.”[/size]
[size=45]Monetary policy[/size]
[size=45]While the financial advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed in a press interview followed by (Al-Mada), that “the decision in which Prime Minister Muhammad Shiaa Al-Sudani directed to reconsider the calculation of loan interest is in the interest of the citizen who borrows directly, especially from government banks, by recalculating the interest.” The annual amount that banks used to charge on the full amount of the loan granted to the citizen borrower until the date of its full repayment.[/size]
[size=45]He added, “The decision applies to unpaid loan balances, and it is an important directive that will reduce the interest burden imposed on the entire paid and unpaid amount until the date of final repayment of the entire loan, as was the case previously,” indicating that “the fixed method for collecting loan interest (i.e. The accumulative method entails unnoticed complications in collecting the same interest rate, repeatedly due to the method of calculation that was adopted under the prevailing banking practices.” Saleh pointed out that, “starting from this year, the methods of calculating the annual interest on bank loans, especially government loans granted to citizens, have changed, so that the cost of the loan becomes as low as possible when calculating the interest that the loan owner contracted with the bank when granting him the loan,” stressing that “this decision applies to The entire Iraqi banking system, without exception, and all loans granted, including housing loans.”[/size]
[size=45]While banking expert Saif Al-Halafi said, “The benefits of loans and advances relative to the Iraqi citizen’s income are considered very large, but the problem is that they depend on the policy of the Central Bank of Iraq because, according to its policy in effect now, it wants to withdraw the cash liquidity that the citizens have and return it to the banking incubators.” Noting, “The size of the monetary mass printed by the government is 110 trillion Iraqi dinars, 60-70% of which is in citizens’ homes.” Continuing his speech, he said, “This phenomenon is unhealthy, as it exposes the monetary mass to damage as a result of daily use and tearing, and costs the state a large price in exchange for printing it again. The more it is printed in reputable international presses, the more its cost increases, and the more it is printed in moderately reputable sovereign presses, the more it is exposed to forgery. Therefore, The Central Bank is trying to print with the finest printing presses.”[/size]
[size=45]Solution[/size]
[size=45]Al-Hilli added in an interview with (Al-Mada), “The process of daily trading of the Iraqi currency through the (hand-to-hand) process exposes this monetary mass to tearing and damage. Therefore, the central bank is trying to raise the interest rate until it withdraws inflation, which is a monetary mass present in Citizens’ homes and returns them to the banks.” Stressing, “The interest depends on a ratio and proportionality according to the estimates of the Central Bank, which is the arbiter in this matter. It knows the amount of the inflation rate and the monetary policies that it must deal with in order to succeed in withdrawing the cash mass from citizens.”[/size]
[size=45]The banking expert continues, “Interest rates will change as a result of the trend towards using electronic payment cards, as it is a very important phenomenon, in addition to increasing awareness among citizens, as the electronic payment system is used in all countries, so why should we not keep up with the rest of the countries in this technical aspect, as This solves two problems: the first is withdrawing cash masses from citizens, and the second is reducing the interest rates imposed on citizens by banks, as the lower the inflation rate, the lower the interest rates.” He continues, “According to the various studies between the Ministry of Planning, the Central Bank, and the institutes of strategic studies located in London, Switzerland, and America, the average income salary of an Iraqi citizen is set at 500 US dollars, and this value, in the face of the high interest rate, is considered decrepit for the Iraqi citizen, and thus he becomes a “slave” until he is paid. The loan and its interest, he needs money to buy his life necessities in addition to finding housing and projects.” Pointing out, “I believe that the Central Bank in the future will adjust the type of loans and interests. Consumer loans for buying cars and other things have high interests, but productive loans such as buying a car (carrying and renting) to sustain small and medium production projects so that the project is productive and profitable.” . It is noteworthy that Al-Sudani directed the Ministry of Finance, the Central Bank of Iraq, and government and private banks earlier to reconsider calculating the interest paid on loans granted to citizens using the simple decreasing interest method instead of the cumulative method, which burdens borrowers with burdens.[/size]
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