Banking sector failed to be an active economic drive
Kurdistan Information and Strategic Research Center conducted a seminar about improving the banking sector in Kurdistan Region. The seminar was conducted at the Ramada Hotel in Suleimaniya on Wednesday, November 6, 2013.
The event was attended by a large number of economic and banking professionals and experts, and the recommendations from the seminar are planned to be discussed and investigated further in a larger scale regional conference to improve the banking and financial sector in Kurdistan Region and make it an active role player in the economic boom in the region.
Dr. Aras Qadir Khoshnaw, the moderator of the seminar, said that they have conducted a similar event in Erbil and are planning to repeat the same in Duhok.
The objective is to draft a plan for the regional conference, which the center is planning to organize in the coming few months.
“Banking sector has not yet been activated in Kurdistan,” said Dr. Khoshnaw. “Hence it needs a push to play a more significant role in boosting the economic infrastructure in Kurdistan Region.”
He also added that the private banks in the region are facing various challenges that have made ob- stacles for them.
Dr. Khoshnaw’s center has been working on this issue and has been investigating the underlying challenges and problems in the hope of finding a solution for the problem.
“The capital of the private banks are very small,” the moderator of the seminar said. “That is why they can’t play an active role in the region’s economy. Moreover, their interest rates are high.”
As far as the international and foreign banks are concerned, Dr. Khoshnaw says there are only a few foreign banks that have branches in Kurdistan.
“In Suleimaniya there was only one Kuwaiti bank that had a branch, which was closed after a while.”
Hisam Hakim Barzinjee, Chairman of the Economic Development Organization, said that major factor behind the issue in this region is the type and value of the guarantee the banks require from borrowers and investors, which sometimes is too high to be provided and another issue, according to Barzinjee, is that the banks’ interest rates are very high and not going down.
Barzinjee suggests when providing loans to investors, banks can take the project itself as a guarantee rather than other guarantees such as properties that are double the value of the loan amount, or even more.
Other details in the bank loans that add to the problem, include the fact that banks do not discount interst in case borrowers pay back their debts faster or before the due date. Ad- ditionally there are tight deadlines for paying back the debt while in Europe, the interest rate will be fixed and the borrowers can pay back as he finds appropriate and practical.
“In addition to the recommendations of these seminars, the experience of developed countries should also be used to improve the banking sector and its role in the economic development in Kurdistan, and especially private banking,” said Ecoomic Development Organization Chairman.
A number of studies, re- search papers and recommendations were submitted by the arttendants of the seminar, most of which were recommendations for the improvement and modernization of the banking sector in the Region.
This picture depicts the building of Erbil Bank in Salim Street, Downtown Suleimaniya.