Iraqi Central Bank demanding banks to review interest rates
Translated by IRAQdirectory.com - [7/8/2009]
Iraqi Central Bank called Iraqi banks to participate in a symposium organized by "Association of Private Banks" on the 15th. of this month, dealing with the foundations of setting interest rates on credits which are showing no signs of growth in banks.
Executive Director of the Association attributed demand atrophy in the market for bank credit to high cost. He said that the results of banks for past year and second quarter of this year, shows limitations of credit provided by banks, compared to deposits.
Board of Directors Chairman of Ashur International Bank, Wadee' Al Handhal, said that the proportion of credit to Gross domestic product
( GDP ) is very low, and below the level of ambition of the sector despite high number of working Iraqi and foreign banks as well as increase in the size of their capital and deposits. He hoped of increasing credit through several ways like: the abolition of the annual credit plan which used to be prepared by the "Central Bank" to banks, granting the boards of directors of banks the freedom to develop a credit plan commensurate with their financial position, the provision of large shared loans and establishment of a joint stock company to be in charge of ensuring bank loans.
The Associate Director-General of banking and credit department in "Central Bank" said that the credit reserve of banks was reflected on liquidity rates which stood at some 60 percent, and that is twice the rate required; this means that there are disabled financial resources which do not have opportunities for credit and safe investment. He added, "The total capital of 35 banks amounts to some 1.2 billion US dollars, but their contribution to granting credit does not exceed 22.5 percent because of their reservation in this area.
Translated by IRAQdirectory.com - [7/8/2009]
Iraqi Central Bank called Iraqi banks to participate in a symposium organized by "Association of Private Banks" on the 15th. of this month, dealing with the foundations of setting interest rates on credits which are showing no signs of growth in banks.
Executive Director of the Association attributed demand atrophy in the market for bank credit to high cost. He said that the results of banks for past year and second quarter of this year, shows limitations of credit provided by banks, compared to deposits.
Board of Directors Chairman of Ashur International Bank, Wadee' Al Handhal, said that the proportion of credit to Gross domestic product
( GDP ) is very low, and below the level of ambition of the sector despite high number of working Iraqi and foreign banks as well as increase in the size of their capital and deposits. He hoped of increasing credit through several ways like: the abolition of the annual credit plan which used to be prepared by the "Central Bank" to banks, granting the boards of directors of banks the freedom to develop a credit plan commensurate with their financial position, the provision of large shared loans and establishment of a joint stock company to be in charge of ensuring bank loans.
The Associate Director-General of banking and credit department in "Central Bank" said that the credit reserve of banks was reflected on liquidity rates which stood at some 60 percent, and that is twice the rate required; this means that there are disabled financial resources which do not have opportunities for credit and safe investment. He added, "The total capital of 35 banks amounts to some 1.2 billion US dollars, but their contribution to granting credit does not exceed 22.5 percent because of their reservation in this area.