BAGHDAD (Reuters) - Iraqi special banks face binding to increase its capital to support its activities a difficult road, as they resisted decades of state control of the sector in order to win a portion of the base assets controlled by government institutions.
Because of the weak credit culture and the lack of a modern banking system and the dominance of state banks, the financial sector is important in Iraq is evolving slowly after more than eight years of US-led invasion toppled the regime of Saddam Hussein.
There are still many Iraqis do not deal with banks. Because of security concerns increasingly concerned about the completion of most of the activities of the business through direct cash transactions.
She said an economic expert Sumaisem peace, "we still have vestiges of the central administration, which is still forcing government departments and ministries to deal with the banks is only the government and then, all the deposits tend to those banks." "Where are the interest earned from the funds of the government go to the government."
The Executive Director of the Association of Iraqi private banks Abdul Aziz Hassoun that private banks in the United Iraq in 1964, paving the way for the dominance of state banks on the financial sector.
The Central Bank's web site on the Internet that after the economic sanctions imposed by the United Nations to Iraq in 1991, private banks began to open again in the country. Iraq has the seven state-owned banks and 23 private banks, eight Islamic banks in particular. But most of the private banking services are limited to deposits and lending profile.
The monopoly of the Bank of Iraq and the Bank of good two governments most of the main assets effectively. The two banks have restructured to eliminate the debt accumulated after years of war and economic sanctions.
Hasson said that the CIS aims to support managed by private banks to state banks controlled 87% of the deposits in the country, while private banks controlled over 13%.
He added that the public sector deposits with state banks $ 30 trillion Iraqi dinars, while the private sector deposits and 11 trillion dinars. In return of deposits in private banks 6 trillion dinars.
According to the Central Bank there is no law in Iraq is preventing private banks to finance government projects, either through loans or buying government bonds.
But the Finance Ministry barred government institutions from two years ago to deal with private banks in order to combat corruption and misuse of funds. He noted the central bank adviser Qassem is harmful to the Bank considered this step is not just against the private sector.
Qasim said, "should have government institutions the right to choose the bank's good, but not in the province of all private banks. There are good private banks."
The Ministry of Finance is currently in talks to help integrate the private banks in the financial system in response to claims from the World Bank and International Monetary Fund.
U.S. Undersecretary of the Ministry of Finance Fadel prophet "They want us to direct our attention to the private sector. Therefore, our plan is how to support the private banks in all areas."
And decided to Iraq in 2006 updated its financial system in particular through restructuring of the Rafidain Bank and Rasheed Bank and the reorganization of management control in the central bank and private sector development.
And approved by the World Bank and IMF in 2009 to assist in providing advice and implementation of the plan, but progress has been slow.
The external debt and internal Bank of Iraq $ 28 billion, while the debt of the Rasheed Bank billion. And most of the foreign debt accumulated by the government during the reign of Saddam Hussein.
The plan includes a program to increase the capital of private banks for up to $ 213 million each by the Bank in June 2013 and is expected to also stimulate some mergers in the sector.
The officials believe that the capital increase will help the private banks, but there is a need for further efforts to modernize the financial system of Iraq.
The Prophet said, "lagged behind our banks for other banks can not deal with international banks because we do not have a complete electronic system."
There are eight private banks only offer service ATM and credit card services. There are no transactions between banks or international payments, and this raises the concern that foreign companies seeking to invest in Iraq and participate in the reconstruction.
The Central Bank is working with the U.S. Agency for International Development to establish a single window for transactions between banks and international payments.
Smeisim said, "Imagine that a foreign investor comes to Iraq, carrying money in a bag. Should have a developed banking system to ensure that the flow of capital movement and walking the same manner as in the rest of the world."
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