Samir Nasiri *: classification of banks contributes to stimulate the development of the banking sector

BY SAMIR ALNASIRI- PUBLISHED IN 17/12/2016

Iraqi banking sector is suffering before and after the 2003 big challenges and obstacles to the work for reasons related to the economic situation is stable and self reasons borne by banks in terms of management of the banking business and the weakness of activity and lack of [...]

Iraqi banking sector is suffering before and after the 2003 big challenges and obstacles to the work for reasons related to the economic situation is stable and self reasons borne by banks in terms of the banking business administration and the weakness of activity and lack of services and products offered to the public. It has established that during the economic crisis that has plagued Iraq for more than two years, we note that most of the banks stopped doing the tasks and banking services that relate to contribute to the economic development and economic growth through the primary activity of banks, a finance and investment employ deposits in credit cash grants and opening letters of credit and the issuance of domestic and foreign remittances and the financing of small and medium enterprises and thus activate the economic cycle. And confined these banks activity to participate in the sale of currency that is doing the central bank a day in order to provide the Iraqi dinar to the Ministry of Finance window, in order to maintain also the stability of the Iraqi dinar exchange rate against the US dollar, and the allocation of equal daily quotas between banks, which helped to banks for financial returns guaranteed because of the difference between the official rate of the dollar and the parallel market rate.

In order to stimulate the development of banks and the banking business to carry out its duties set forth in the banks, instructions and regulations, guidelines and operational window of the central bank and the customer service and the national economy, the law requires the necessary measures to re-audit, evaluation and classification of banks steps.

There are international benchmarks for special classification agreed central banks in most countries Calcetrh on inflation, economic growth and monetary stability, independence and the achievement of economic goals. Because central banks are subject to classification and what it is, which monitors and supervises the banks if it should be a classification of banks according to international standard approved standards in most countries, including the regional countries to Iraq.

So we suggest classification of banks to adopt international standards for and you 're adding as is currently in place in the International Classification (CAMELS) , which is based in the assessment and classification of capital and assets, liquidity, profitability and risk management standards. But given the specificity of the banking business in Iraq requires assigning party or company specialized international to do, in conjunction with the Central Bank, re - evaluation and classification adoption of the standard standards and additional consistent with the reality in Iraq such as the adoption business results for the banks and final accounts for the years ( 2015-2016 ) and focus on the assets, income and expenses analysis and capital adequacy indicators of employment of money and credit the cash given to the distribution sector and the rate of return to capital and return on assets and liquidity ratio and the extent of banks and banking instructions window commitment and particularly activating the central bank initiative to finance small and medium enterprises and obtaining distressed debt and a commitment to the Basel Convention , 2 and 3 and management of credit, liquidity, operational and market risks . It is hoped that as a result of rating helps the central bank to determine the share of each bank to sell the currency window in the determination of the bank 's share of the amount allocated for the financing of small and medium enterprises according to the new to be classified .

* Samir Alnasiri

Member of the World Union of Arab Bankers


Source