The reality of Iraqi banks suffers from neglect from the responsible authorities, and they have entered a period of inactivity that made them in the last ranks compared to other international banks that are witnessing great developments day after day, using and relying on modern technological means, including their daily transactions.
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The Ottoman Bank is one of the oldest banks in Iraq, followed by the Iranian Shahanshah Bank, and then the British Eastern Bank.
National banking began in 1935, when the Agricultural Bank was established, which was transformed in 1940 into two banks, the Agricultural and Industrial.
In 1941, the only Rafidain Commercial Bank was established, then in 1947 the Central Bank was established under the name “National Bank of Iraq”.
What are the reasons for the deterioration, specifically during the last three decades, and the banks entering the period of inactivity, and their inability to keep pace with global developments? What are the reasons for the citizen’s reluctance to deal with it after World Bank figures revealed that only 23% of families have an account in a financial institution, which is among the lowest in the Arab world? Inquiries put by Al Jazeera Net in front of the specialists.
Why do Iraqis refrain from local banks?
The financial and banking expert, Abdul Rahman Al-Sheikhly, attributes the citizen’s reluctance to deal with these banks to his loss of confidence in them, which made the bulk of the cash mass hoarded by the owners of capital without entering it into banking channels.
Al-Sheikhly talks here about what he described as interference and political influence, which negatively affects the owners of banks.
He criticizes the Central Bank, which, according to his opinion, has recently tried to reduce its centrality towards the performance of some of those banks that fall under its responsibility in terms of supervision and monitoring of their performance in accordance with international standards.
Al-Sheikhly believes that the Ministry of Finance – which is responsible for drawing up fiscal policy – has a great influence at a time when the Central Bank is supposed to be the only one responsible for drawing up monetary policy in accordance with the constitution.
Who are the losers and winners?
Al-Sheikhly believes that the winner from these measures are the financially and administratively corrupt, pointing out that there are 78 active non-governmental banks in the country between local commercial or Islamic and branches and offices of foreign banks, in addition to 3 under establishment.
He adds that most of the owners of capital are accused of corruption, and they are the beneficiaries. They withdraw money whenever they want without regard to the deposits of small depositors, and the winner is the owner of the bank or the concessionaire in it, at the expense of the simple depositor.
What is the impact of political interference on the reality of the work of banks?
Al-Sheikhly confirms, in his response to this question to Al-Jazeera Net, that there is a clear political influence in the work of banks through the possession of some influential personalities of these banking institutions, and many of the assets of some banks are derived mainly from financial and administrative corruption, which makes them influential in the policies of those banks.
He points out that the most prominent problem after political interference in the reality of banks is extortion, citing the example that some bank owners, who are usually notable personalities, but they fled outside the country and worked to manage their financial institutions from a distance in order to reduce the blackmail of politicians, and he acknowledges that political rivalries It greatly affects the banking process, but at the same time it does not hide the role of external influences, especially the issue of parties that possess uncontrolled weapons and compel bank owners to submit to them and implement their demands.
The banking expert reinforces his talk by mentioning cases with some banks, which are the use of some of a certain political bloc against another bank that depends on another bloc, and thus the citizen is the only loser, and this is what drives him to refrain from dealing with these banks.
What is the impact of wars and sieges on this sector?
The economic researcher Aqeel Al-Ansari mentions some of the attempts made by the government during the past years to develop this sector, such as financial inclusion and the Ministration program, rehabilitation and development of monitoring, and compliance with international laws, which reflected positively on the banking sector, and it was noted that there was an increase in accounts in banks due to the localization of salaries program. employees.
Al-Ansari stressed that these steps are not enough to reach the level of ambition, and help to compete with developed countries, including neighboring countries.
He considered that one of the most important obstacles is the great control of government banks, which did not develop themselves, as they monopolize more than 80% of the banking sector in general.
Al-Ansari admits that the banking sector lags behind its peers by about 30 years due to administrative corruption, the country’s subjection to economic sanctions and embargo, in addition to the wars that took place.
He stressed the need for institutional rehabilitation that enables the development of the banking sector, such as comprehensive programs to link branches and the public administration, in order to provide better services and more control.
infrastructure and technology
Al-Ansari responds to Al-Jazeera Net’s question about the need to rehabilitate the infrastructure and rely on technology in controlling accounts, and electronically delivering services and products to customers, in addition to linking official departments with programs that banks can access to verify information such as the tax department, commercial registry, real estate, and souls registry, and other other departments Considering it a very important step.
He believes that these steps help the banker to provide banking services and products easily, by accessing the electronic information department to verify the identity presented in front of him, without the need for the customer who submits all his papers, but that requires only submitting the commercial registration number to verify the customer’s information, considering that this It will encourage the process of registering and opening an account and providing banking services.
Al-Ansari also proposes the establishment of a banking college for education and training in different specializations, given that banks are multiple and diverse specializations and not one specialization.
He stresses the need to encourage international banks to work in the country after a large part of them left during the years 2013 and 2014, pointing to the need for those banks to return to transfer their banking expertise, such as banking services and products.
What are the main reasons that made the banking system late?
A member of the Parliamentary Economy Committee in the House of Representatives, Mazen Al-Faili, blames this delay on mismanagement and planning, and regrets that banks have not kept pace with the technological development of global banking.
Al-Faili – in his response to Al-Jazeera Net’s question – acknowledges that the influential parties and those in power bear the major responsibility for the decline of the country in general, and the banking sector in particular, and confirms that each party thinks of its own interest at the expense of the public interest, which is the responsibility of everyone, and criticizes at the same time. The absence of a truly agreed upon national vision, and he believes that the loss of these components has made the banking reality far behind, compared to other countries.