Bank­ing sec­tor failed to be an ac­tive eco­nomic drive

The Kurdish Globe - - FRONT PAGE -

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.

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