Unfair interest rates control bank loans... and financial oversight is non-existent in Iraq

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[size=52]Unfair interest rates control bank loans... and financial oversight is non-existent in Iraq[/size]

[size=45]There is no banking supervision over the high interest rates on loans that burden citizens after their goal was to serve them. Economists have confirmed that these loans do not serve citizens and are exaggerated.[/size]
[size=45]The burden of these interests varies from one loan to another, but they reach their peak in housing loans, where in some cases they exceed 50% of the loan value, depending on the amount and the years of repayment.[/size]
[size=45]Obstacles
Economic researcher Diaa Al-Mohsen said, “Loans are supposed to be granted to serve the national economy, and they also benefit the borrowing citizens, but the opposite happened due to the obstacles placed in the face of the citizen, represented by the credits given to the bank to guarantee repayment of the loan value, and the interest due on the loan, which cannot be provided by the borrower.”
He pointed out that “if the borrower had the ability to provide these requirements, he would have gone in another direction to implement his project that he submitted to the bank, and attached to an economic feasibility study.”[/size]
[size=45]Al-Mohsen explained that “the banking rates are exaggerated more than necessary, while the bank talks about an interest rate that does not exceed 8%. When a citizen submits a loan application to Rafidain Bank, for example, and let the loan be 15 million Iraqi dinars, we find that the bank hands the borrower an amount of 14 million and 500 thousand Iraqi dinars, and the borrower must pay the original amount and the interest on the loan, which is 23 million dinars.” He noted that “the interest rate is 56%, which represents seven times the originally set interest rate, and this cannot provide any benefit to the Iraqi economy, as it represents a process of aversion by the borrower due to the high interest rate, and thus opportunities are lost that could be of benefit to the national economy, which requires the executive authority to pressure the monetary authority to reduce the interest rate that is placed on loans granted to borrowers.”[/size]
[size=45]Since the government banks began issuing advances and financial loans, borrowers have started complaining about the high bank interest rate. Although the official interest rate on loans is 4% of the loan value, the problem lies in the bank calculating this rate multiplied by the number of years of repayment of the loan, so that the interest reaches 50% of the loan value.[/size]
[size=45]Economic chaos,
while the economic researcher, Duraid Al-Shaker Al-Anzi, revealed that “loans are a large process, and a large part of the financial and economic policy of any country, and the result of the economic chaos in Iraq, which did not lead to anything like construction and development or methodology and stability due to the overlap of many external and internal party and personal factors, like the rest of the irregular legal matters for building a country.”[/size]
[size=45]Al
-Anzi added that “with internal borrowing, a country can be built, as $5 billion from the Central Bank to the Iraqi private sector is given directly and with the least possible interest and once, i.e. interest, (because the Central Bank is a non-profit institution and this is supposed to be the case, but it has abandoned it), as we can prepare 50,000 medium-sized factories and operators in 15 governorates, and operate various industries and agriculture in these governorates.” He noted that “4 to 5 million unemployed workers are withdrawn with the lowest interest rate, while through banks, funds are provided, withdrawn and deposited inside banks and not outside them, and this means that banks will recover within months.”[/size]
[size=45]Al-Anzi pointed out that “if the loan is through banks, interest must be taken from the borrower, and here the relevant authorities must intervene to impose an interest rate not exceeding 2%, because the amounts are high, and it is not possible for private government banks to achieve any profitability within 10 years of operation or more.”[/size]
[size=45]He continued, "A law must be enacted for banks and insurance companies to participate in the process, by appointing monitoring and guarantor partners to eliminate all corruption rings, with participation rates of 5% less or more for a period of twenty years, as this process depends on future development, and this procedure is considered the simplest solution for domestic productive loans."[/size]
[size=45]“Usury” interests
Al-Anzi added, “Housing loans are strange, as the more loans there are, the more the prices of housing or residential units rise significantly,” indicating that “the objectivity of the Central Bank in this regard is questionable, whatever the justification,” adding in his speech that “loans and domestic lending in previous and current periods are an ugly usurious process that burdens the borrower in repaying and paying off the loan, and for the interest that reaches 50% of the loan principal, there is no equivalent to it, at least in neighboring countries, which forces the borrower to even give up the project or residential unit for the purpose of repayment.”[/size]
[size=45]He continued, “Many citizens have refrained from borrowing because it involves usurious interest,” stressing that “the percentage of housing borrowing was close to 30% of the allocated amount, and the percentage of industrial and agricultural borrowing did not reach 3 or 4% of the amount offered as a loan, as the lack of attention by decision-makers in the state to this issue and its treatment is one of a series of lack of attention to the economy as a whole.”[/size]
[size=45]It is worth noting that “government and private banks are more like independent bodies and no authority over them except for the Central Bank of Iraq, and all their procedures and instructions, and the advances and financial loans they grant, and the banking interest they impose, are carried out with complete independence from the government, its ministries and institutions,” according to many statements and declarations issued by the Central Bank of Iraq, the banks themselves, government officials and representatives, at previous times.[/size]
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