Selected problems of the banking sector and proposals to develop a comprehensive strategy to overcome them


07/6/2012 2: 35 am
At a symposium of the Institute for economic reform

Baghdad Yasser ascendant

Economic workshop stood when highlighted the problems and constraints that hinder the performance of banking in Iraq across four worksheets prepared by specialists and made at the workshop organized by the Iraqi Institute for economic reform based on the importance of the banking sector in development.

Proceedings of the symposium was chaired by economist and consultant in one of international institutions and Amer Al jawaheri Hafidh supervised and participated in the selection of experts and specialists in the public and private sectors.

The first working paper of Dr. Ahmed albatal was titled private banking industry development requirements in Iraq where Iraq referred to give great importance to the subject of banking reform and edited through a legal banks and Central Bank no. 94, no. 54, issued in 2004, the promise of the most important laws which included a clear vision of the role of banks under the market economy mechanisms but wondered where bugs?

He answered his question by saying that the banking sector has not benefited from the advantages of these laws for several reasons, including political and economic conditions that led to the continuation of the old laws which were inconsistent with the window and phase shifts and the requirements of the market economy mechanism and this discrepancy contributed to the delayed development of banking sector performance and himself to perform its role in development.

Albatal suggested that although the banking sector and after 8 years of attempts to reform managed to achieve significant development and the asharth of official statistical data for 2012 that the structure of the banking sector stood at 44 banks 23 traditional and 11 foreign Muslim and 10 branches.

Said: but this number of private banks had been unable to compete with the State banking sector banks and private banks push this impediment to limited banking services and if you suffer from poor experiences, find that reflected their performance making it raise the roof safeguards which led to weak financial structure due to the reluctance of clients to deal with roof guarantees along with some restrictions in the new law on banks, particularly articles 27 and 28.

Then offered the second worksheet and the marked state banking reform submitted by the researcher jouman Hassan Ali which confirmed that the economic situation in Iraq reflected on the financial and banking sector and shows clearly the weaknesses afflicting the financial and banking systems.

Referring to low ratios of the banking sector's contribution to GDP to 1.85 percent in 2012 compared to neighbouring States, where the proportion of contributors in Saudi Arabia and 7.12 11.9 in UAE and 14.96 in Egypt reflect a major weakness in the solidity of the banking sector, as the Iraqi banking density remains low and not exceeding 2.0 percent any rose 45 000 for each branch bank.

third worksheet either diagnosed problems and other challenges affecting the banking sector where view Economist Dr. Majed mock which Focused on weak banking traditions at home which led to direct capital towards abroad as a result of poor control and supervision and poor use of technology for pointing out the subjective factors relating to the absence of banking policies and weak operational standards for managing liquidity risk and the absence of good governance and other criteria.

Mock drew also twice used technological means and the absence of risk precautions to merge ownership of capital management and weak traditions of banking and banking culture among the public all these factors painted gloomy on the banking sector is another issue for pointing out very important while referring to the weak structure of the Iraqi economy, especially the private sector.

Then came the role of joint fourth working paper for the experts ' Walid IDI, Director General at the Central Bank of Iraq iPod. Ikram Abdul Aziz, Director-General of the national investment Corporation, where the paper focused on other aspects of disability, including realities which indicate that most Iraqi banks in Iraq operate as safe deposits boxes and frozen this hue alone limit movement in economic activity in Iraq and determine the indicators of growth required according to Central Bank statistics have shown that the average liquidity of banks operating in Iraq 51 percent is higher than the standard of 30 percent.

Previous papers paper participated while referring to weak opinion using ATM and banking culture bugs so that 20 percent of the public retain its surplus cash in banks and the rest retained in homes confirms weak culture savings add to that low density Bank branch banking, where there is one for each 40,000 inhabitants, while in Saudi Arabia, for example, a section for each 3,500 inhabitants and weak credit facilities and other problems.

Thus the image looks distorted because banks and challenges facing problems but unpublished worksheets only washing but overall proposals are almost similar convergent and therefore we summarized the work of the Institute studied and presented to the experts to come up with meaningful recommendations to stakeholders resolution proposals included the need to accelerate the implementation of the resolutions of the Supreme Supervisory Committee to restructure State banks, which notably cleaning budget for each Bank and activate a new law proposal for State banks and the separation of ownership of capital and Management Council The composition of the Board of management and the application of the principles of good governance.

Summary of proposals focused on future visions for reforming the banking system and the need to develop a comprehensive strategy and variety to develop technique used in the banking system and linking banks with extensive information and communications networks within the scope of oversight methods and financial disclosure and accounting and develop awareness and this little information about banking activities of the iceberg we readers awaiting the recommendations effective and influential in giving the banking sector a strong impetus towards service development programmes.