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Iraqi Council of Representatives

Finance Committee

Finance Committee Report on

Banking System Reform Requirements in Iraq

February 2014

Prepared by

Mohammad Ahmed Jawad

Financial Advisor

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Contents Page

Executive Summary……………………………………………………………. 6

Introduction……………………………………………………………………. 8

Chapter One: The Current State of the Banking Sector in Iraq…………… 16

Chapter 2: The Role of the Central Bank and its Regulations……………… 24

Chapter 3: Monetary Policy Tools……………………………………………. 27

Chapter 4: Bank Reform Strategy……………………………………………. 30

Chapter 5: Islamic Banking…………………………………………………… 37

Chapter 6: The Bank Supervisory Authority………………………………… 41

Chapter 7: Future Steps……………………………………………………….. 46

Recommendations……………………………………………………………… 47

Sources …………………………………………………………………………… 50

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As for the foam, it vanishes, cast off; but as for that which

benefits the people, it remains on the earth.

God Almighty has spoken the truth

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Introduction to the Finance Committee

The Finance Committee is one of the major

permanent committees in the Iraqi Council of

Representatives that were formed according to the

provisions of Articles 69 and 70 of the Iraqi

Council of Representative’s Rules of Procedure.

Based on the provisions of Article 93 of the Rules

of Procedure of the Iraqi Council of

Representatives, the Committee is responsible for

the following:

First: Monitoring the state’s general budget and

making transfers between its sections.

Second: Proposing legislation related to customs,

taxes, and fees.

Third: Monitoring banks, credit, loans, and

insurance.

Fourth: Supervising the preparation of the Council

of Representatives’ budget.

Fifth: Following-up on debt forgiveness and the

reparations that were imposed on the Iraqi people.

Sixth: Monitoring the financial policy of the

different ministries and state institutions.

Some of the other tasks assigned to the Finance

Ministry:

Article 130 of the Rules of Procedure states

the following: “The Finance Committee must

consult the opinion of the Cabinet on any proposed

amendment that the Committee suggests for the

appropriations included in the draft budget. The

committee must include the government’s opinion

and justifications in its reports. This provision

applies to any proposed amendment put forth by

any committee or by any of the members if the

proposed amendment carries with it financial

burdens.”

The Names of the Members of the Finance Committee

The Second Legislative Session The Second Legislative Year The Second Legislative Term

Representative Dr. Haider Al-Abadi

(Committee Chairman)

Representative Dr. Ahmed Hasan Faizallah

(Committee Vice-Chariman)

Representative Dr. Ahmed Al-Mesari

(Committee Rapporteur)

Representative Ibrahim Al-Mutlaq (Member)

Representative Ameen Hadi Abbas

(Member)

Representative Dr. Jabar Al-Jabari (Member)

Representative Hasan Al-Bayati

(Member)

Representative Dr. Shorsh Haji (Member)

Representative Abdul Hussein Al-

Yasiri (Member)

Representative Falih Al-Jayashi (Member)

Representative Dr. Majda Al-Tamimi

(Member)

Representative Najeeba Najeeb (Member)

Representative Dr. Haitham Al-

Jabouri (Member)

Representative Ali Al-Sajri (Member)

Representative Duleer Adbul Qadir

(Member)

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Likewise, Article 143 of the Rules of Procedure states the following: “The

Finance Department shall prepare the final accounts of the Council, and present

them to the Speakership, so that they can be approved and sent to the Financial

Affairs Committee (the Financial Committee, according to its official name). The

Committee will send a report on this to the Council for approval.”

Following up on Iraq’s final accounts and preparing a report on said accounts to

be presented to the Council of Representatives when the final accounts are

presented for approval.

Following up on the reports of the Board of Supreme Audit, including all types of

reports, with the relevant bodies to set the fixed observations on the reports.

This is in addition to the responsibilities assigned to the Finance Committee as

one of the specialized permanent parliamentary committees.

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The Vision…

Iraq is a modern state built on a strong economy, and in its appropriate position within international society.

The Message…

Iraq’s wealth and bounty are for everyone at the present time, and for its future generations. They must be handled with

transparency and justice so that everyone may benefit from them.

Issuing laws that serve the largest segment of citizens possible, which are in harmony with the goals of the state’s general

federal budget and adhere to the general framework, foundations, and principles ratified in the Iraqi constitution.

This is in addition to overseeing spending related to these laws in a manner that achieves their goals, reduces corruption and

waste, and protects the sanctity of the public finances.

The Objective…

Guaranteeing that the state’s resources and revenues are distributed among the Iraqi people with justice and equity through sensible

legislation and effective oversight, in cooperation with others and with support for sustainable development plans.

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Executive Summary:

This report seeks to present the reality of the banking sector in Iraq, and to shed light on

the most important problems and obstacles that stand in the way of the advancement of

this vital sector, with the goal of creating the legislative environment appropriate to

banking operations, and for this sector to play its role in the country’s economic

development.

As part of the Finance Committee’s tasks in the parliamentary monitoring process and in

proposing legislation, the Finance Committee in the Council of Representatives

conducted a series of meetings and gatherings with local and international banking

experts. The Committee also held workshops and studied research presented by Iraqi

banks with the goal of understanding the reality of the Iraqi banking sector.

Based on this, the Finance Committee prepared this report, through which the Committee

reached a number of results and recommendations that are expected to improve and

develop the banking industry in a manner that keeps up with global development. This

report moves towards the completion of subsequent steps to be taken by the Council of

Representatives. The results of this report include:

1. The need to create banking legislation appropriate to development and to the need

for banking services

2. The need to employ modern banking systems

3. Giving a larger role to private banks alongside the public banking sector

The report will deal with the following main issues:

Chapter 1: The Current State of the Banking Sector in Iraq,

This chapter takes a general view of the structure of the banking system by looking at the

number of banks and branches currently operating in Iraq, the amount of capital owned

by the private and government banks, the amount of monetary credit available, bank

deposits and their percentage of the GDP, and the most prominent observations made by

the Finance Committee on the current state of the banking sector.

Chapter 2: The Role of the Central Bank and its Regulations,

This chapter will present the aspects of the Central Bank’s independence, its most

important functions, and its role in maintaining the integrity of the national economy, as

well as the laws that regulate the relationship between the Central Bank and the banking

system.

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Chapter 3: Monetary Policy Tools,

This chapter describes monetary policy tools, their goals, and their uses.

Chapter 4: Bank Reform Strategy,

This chapter deals with the issues that hindered the bank reform process, and the

procedures that led to structural imbalances as a result of the inefficient appropriation and

gathering of resources. It also deals with the challenges to reform in the implementation

of the Basel decisions, in addition to drawing a broad outline for bank strategy reform.

Chapter 5: Islamic Banking,

This chapter sheds light on the Islamic banks in Iraq, and the main problems facing these

banks, as well as some of the solutions proposed to open the field for the activities of

these banks so that they can contribute to economic growth.

Chapter 6: The Bank Supervisory Authority

The Bank Supervisory Authority is tasked with protecting the banking industry’s

financial transactions. Therefore, this chapter will present the requirements for the

presence of an independent banking regulatory body as an essential aspect of supervising

the banking system and ensuring its compliance with international standards.

Chapter 7: Future Steps

This chapter presents the major steps through which the Finance Committee seeks to

move forward towards the process of reform and development, as well as ways for

moving forward in the future to advance the banking sector.

Recommendations

Finally, the Finance Committee proposes a group of recommendations that may

contribute to guiding and planning for putting into place a clear methodology for

establishing a sound banking system that supports and contributes to economic growth.

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Introduction

In light of the development trends and their goals for building a prosperous

socioeconomic future for the new Iraq and in keeping with the objectives for creating

sound banking legislation and regulations to provide a favourable climate for the banking

industry, the Finance Committee in the Council of Representatives has started the process

of reforming the existing banking laws and the parliamentary inquiry procedure in

cooperation with the Central Bank, public banks, and private banks, as well as experts,

professionals, and supporting international organisations.

There is no doubt that the overall situation of the Iraqi macro-economy is reflected in the

financial and banking sector and clearly demonstrates the areas of weakness in the

financial and banking systems. However, the flawed nature of the structure of the Iraqi

economy cannot be addressed by politicking but rather through a general economic

policy of cohesion in the short term and common purpose in the long term so as to

contribute to the diversification of the sources of GDP generation1.

This first requires halting the significant decline in key productive sectors’ contributions

to GDP generation to unprecedented rates and increasing these sectors’ growth rates. The

contribution of the financial sector to economic growth has declined to conservative rates

in comparison to the economies of other Arab countries. This reflects a significant

weakness in brokerage and points to the banking sector’s weakness. In fact, Iraqi banking

density is still low and is no more than 1% – or 45,000 people per bank branch.

This reflects the necessity of completing policies and procedures for financial and

banking reform and strongly indicates that this reform’s priority should be restructuring

state-owned banks and affording private banks the freedom to work in accordance with

international rules and standards. These procedures and policies will actively contribute

to making all financial and banking organisations – private and public alike – subject to

the standards of profitability, competency, and competiveness in the field of providing

services, in addition to their traditional role in spurring the growth process and supporting

the abilities of the economic sectors to lead economic activity.

Based on the above, the Finance Committee in the Council of Representatives has started

to take serious and practical steps with assistance from Global Partners Governance, who

are specialists in parliamentary issues, and with the help of the expert Mr. David Green.

The steps taken by the Committee are represented in the following stages:

1 The Iraqi Institute for Economic Reform – Public Bank Reform, the Reality and the Horizon.

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First Stage: Visiting London

The Finance Committee conducted a visit to the British House of Commons in the United

Kingdom from March 3rd

through March 10th

. This visit took place as a part of the

programme of the Arab Partnership Initiative, managed by Global Partners Governance

and sponsored by the Foreign Ministry and the British Commonwealth to strengthen

shared relationships between the parliaments of the world.

The visit’s programme included a number of meetings, as follows:

The Finance Committee visited the British House of Commons and met with a

number of high-level employees working in the British Parliament in order to

learn about the workflow mechanism within the parliamentary committees, and to

get historical background on the establishment of the British Parliament and the

tasks carried out by its committees.

Meeting with Mr. Colin Breed and Mr. Alex Brazier, representatives of Global

Partners Governance, which supported the programme.

Meeting with Baroness Emma Nicholson, a member of the British House of

Lords. She explained her various fields of work in Iraq.

A meeting with Mr. Chris Shaw in the Department of Chamber and Committee

Services in the British parliament to go over the mechanisms for coordination

between the committees, present the mechanisms used among the committees,

and to listen to and answer the questions of the members of the Finance

Committee.

Listening to a presentation on the Public Accounts Committee in the British

Parliament, the tasks carried out by this committee, and its oversight and

legislative role. This was especially notable because the committee is currently

preparing to discuss next year’s general budget law, which is expected to be

presented to the British parliament for ratification in the coming days.

A meeting with Mr. Philip Aylett, a senior employee in the Public Accounts

Committee. He has an important role in supporting this committee and others.

There was a presentation on the state of the Public Accounts Committee’s work

and the employees’ role in the committee’s work.

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A meeting with Mr. Nadhim Zahawi, the first Iraqi to win election to the House of

Commons. He listened and responded to the questions of the members of the

Finance Committee, especially those related to the Finance Committee’s work

and ways to advance the state of banking in Iraq, as well as how to benefit from

the expertise that the British side can provide in this field, and other fields that

concern the Iraqi Council of Representatives in general.

A meeting with Mr. Dorian Gerhold, secretary to the Public Accounts Committee.

A meeting with Mr. Pat McFadden, a member of the Treasury Committee in the

British House of Commons. He explained the Treasury Committee’s work

mechanisms and the coordination between it and the Public Accounts Committee

in debating the general budget law.

A meeting with David Goldsworthy, the manager of the National Audit Office

(equivalent to the Board of Supreme Audit in Iraq) to benefit from the Audit

Office’s experience and the reports that it periodically provides to the House of

Commons. This is in addition to learning about the relationship linking the two

bodies, as the National Audit Office is an independent body that provides its

reports to the House of Commons. Finance Committee members also listened to

the National Audit Office’s managers’ answers to their questions.

A meeting with Ms. Karen Northey, manager of International Relations in the

Financial Services Authority. The group discussed the Authority’s role in

providing the required financial reports and inquired on the possibility of

cooperation with the Finance Committee in the Council of Representatives to

work to overcome the financial crises, and to work for ways of advancing the

state of banking Iraq. A meeting with Mr. Jacob Land, manager of the Financial

Stability department in the Authority, to look at the department’s role in financial

work.

A meeting with the Adam Smith Institute’s executive director Leith Beni and

discussion on cooperation between the Finance Committee and the institute, and

sharing the institute’s expertise to advance the Committee’s situation, and the

financial situation in general. A meeting with Mr. Dan Jarman, the senior

manager in the office of Government Reform in the same institute to give a

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presentation on the institute’s contribution and role in supporting the Finance

Committee.

A meeting with Mr. Alistair Burt, the minister responsible for the Middle East in

the British Ministry of Foreign Affairs, in which the possibility of solving the

lingering problems between the two countries was discussed. The Chairman of the

Finance Committee gave a presentation on the situation in Iraq and the possibility

of Britain becoming more involved in Iraq in the field of investment, as well as

ways to strengthen relations between the two countries.

A meeting with Mr. Rick Beck and Mr. David Sparling, the two managers of

HSBC Bank to look at the bank’s work and the possibility that the bank become

more involved in bank dealings inside Iraq in order to advance in the Iraqi

banking system. It is hoped that the bank’s executive director will visit Iraq and

meet with the Chairman of the Finance Committee soon, in coordination with

Global Partners Governance.

At the end of this short summary of the Finance Committee members’ meetings and

discussions with the bodies mentioned above, and throughout the days of the visit, the

Committee reached a group of recommendations, perhaps the most important of which

are connected to the banking sector and point to:

The importance of reviewing the banking legislation in Iraq in order to advance the

banking situation so that it can keep up with the huge developments that have occurred in

banking transactions in the world. This shall be accomplished through coordination

between the relevant bodies (the Finance Ministry, the Iraqi Central Bank, the Finance

Committee), and any body that can contribute to this goal.

Second Stage: A Workshop held under the title “Reforming the Legislative

Environment to Advance the Banking Sector”:

The workshop was held in September 2012 in the Iraqi Council of Representatives.

During this workshop, participants discussed a number of the relevant research papers

submitted by related agencies and came up with a set of recommendations to be followed

to draft legislation that meets the needs of the banking sector and the requirements for

advancing this vital sector so that it takes its role in leading economic activity.

The workshop’s programme centered on the following topics:

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Banking Law No. 94 from 2004, its legislative shortcomings, and required

amendments.

Islamic Banking Law

Evaluating banking technology in Iraq, the need for drafting a law that covers it,

and its relationship to electronic commerce.

Increasing the capital of Rafidain and Rasheed Banks through the issuance of

government bonds.

Clearing the balance sheets of Rafidain and Rasheed Banks of debts and losses

inherited before 9 April 2003.

The workshop was attended by members of the Finance and Economic Committees in the

Council of Representatives, the National Investment Authority, the Vice-Governor of the

Central Bank, general directors of state-owned banks, the Association of Banks and the

Federation of Iraqi Banks, international and local banking consultants, the chairmen and

managing directors of private banks, and a group of academics and professors from Iraqi

universities.

These topics had already been sent to the Central Bank, most of the state-owned and

private banks, the Office of Company Registration, the Shura Council, and the Banking

Association and Federation, as well as related agencies, experts, and professionals. This

was accompanied by a request to submit research papers and shed light on the legislative

constraints that stand in the way of advancement and keeping up with developments, as

well as to submit proposals for developing legislation and improving its optimal applied

performance.

The workshop reached the following recommendations:

1. Amend Banking Law No. 94 from 2004 and consider amending other laws (such

as the Private and the Public Companies Law, the Tax Law, and the Anti-Money

Laundering Law).

2. Promote the merger of large and small banks.

3. Establish a deposit insurance corporation.

4. Support the Central Bank’s decision to increase banks’ capital.

5. Open letters of credit in public and private banks.

6. Clear the way for forming state agencies in collaboration with private banks and

allowing funds to be deposited into them within the limits determined by a

committee formed for this purpose.

7. Develop the banking sector technologically.

8. Apply the principles of Basel I, II, and III.

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9. Apply the international accounting and governance standards.

10. Create a committee of members from the Finance Committee and a number of

experts and charge it to follow the implementation of these recommendations,

discuss amending the Banking Law in future meetings, and then hold a workshop

to review what was agreed upon.

Third Stage: A Workshop held in March 2013 in Amman on “Regulating and

Supervising Banking”:

This workshop is an update for the Finance Committee’s action plan in cooperation with

Global Partners Governance. The focus points of the workshop included the following:

A working paper presented by the Finance Committee on the role of banks in the

development and economy of Iraq. It discussed the following:

1. The Iraqi banks’ activities, business, and role in the banking industry prior to

2003.

2. The Iraqi banks’ role after 2003, and what happened to the infrastructure and

reconstruction process

3. The reforms required for creating competitive banking financial systems that help

to support the macro economy.

4. An examination of the level of banks’ role in their traditional functions.

5. An examination of banks’ rates of contribution in the different sectors.

Supervising and Managing Risks:

Collin Lobo –Regional Head of Financial Risks for Standard Chartered Bank.

Addressed the manner in which major banks abide by regulations, manage risk, and

guarantee stability and examined the following points:

1. The situation in Iraq

2. The manner in which fraud affects the financial sector

3. The regulatory environment in Iraq

Conforming with National Regulations:

Gavin Wishart – Head of Banks for Standard Chartered Bank.

Addressed the issues to which a bank must give attention during its transactions in

any country and in its relationship with the financial regulatory authority in that

country, as well as the importance of looking deeply at the effects of positive and

negative changes on legislation and the need for regimes to provide a good general

framework that does not constrain business.

Principles of Organisation and Oversight:

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David Green – Specialized consultant on financial regulations and central banking.

Presented a working paper entitled “The Requirements for Sound Financial Oversight

in Iraq” that focused upon the most important fields for examination at the present

time.

Lessons Drawn from the Banking Crisis:

John Sutherland – Senior Adviser at the UK Financial Services Authority.

Discussed the importance of banking reports’ transparency, and modernising the rules

and regulations to stay current with the changes witnessed by the international arena

in banking and financial services.

Dubai International Financial Centre:

Issa Baddour – General Consultant

Discussed the foundation and activities of the Dubai International Financial Centre,

the role of specialized agencies in the Centre, and the privileges the Centre grants to

financial organisations and international banks.

The Committee’s Report and Future Steps:

Colin Breed & Alex Brazier – Parliamentary Consultants – Global Partners

Governance

The Finance Committee’s report on the parliamentary inquiry will be prepared in

order to study financial institutions, the banking sector, and the level and nature of

regulations and legislation required.

The conference included discussions between members of the Finance Committee and

experts on the range of reforms needed in the banking sector, amending current

legislation, developing banking transactions, dealing with money laundering, the

importance of technology and modern systems in banking, the role of oversight and the

Central Bank in monitoring banks’ performance, banking secrecy, and the reasons for the

financial crises harming the banks.

A handful of recommendations were drafted. The most important of them are the

following:

1. Forming a Banking Oversight Authority attached to the Council of

Representatives.

2. Restructuring the General Inspectors’ Office in the Central Bank and attaching it

to the Banking Oversight Authority.

3. Monitoring the restructuring of state-owned banks.

4. Introducing modern methods like the comprehensive system and credit cards to

banking, modernising it in accordance with international technology

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advancement, and tying the banks into a single network to facilitate the deposit

and withdrawal processes.

5. Giving the boards of directors of banks broader decision-making powers.

6. Choosing the professional competencies for leadership in the banking industry.

7. Clearing the way for private sector banks to open letters of credit.

8. Easing the procedures for opening foreign bank branches and removing the

complications in government offices.

9. Holding a symposium on banking reports and the role of the auditor sponsored by

the Finance Committee and inviting the Central Bank, banks, and the Accountants

and Auditors Syndicate.

10. A visit to the Dubai International Financial Centre to learn about their experiences

and expertise

11. Preparing a report that explains oversight methods and banking matters and

principles to enable the Finance Committee to draft banking-related legislation.

This report was prepared for the above reasons. The Finance Committee hopes it will

contribute to realizing its objectives, as there is a need to take rapid, fundamental

measures to address the current banking legislation and regulations and create equal

opportunities for all banks in line with the strategy for banking reform.

Success Comes from God

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-Chapter One-

The Current State of the Banking Sector in Iraq

First: The Structure of the Banking Sector

The banking sector in Iraq consists of 54 banks in 2012. This includes 7 state-owned

banks (which own 479 branches, 8 of which are located abroad), as well as 47 private

banks, which are divided into 23 commercial banks, 12 Islamic banks, and 12 foreign

banks. In total, they own 515 branches, 4 of which are located abroad.2

Second: The Banking System’s Capital:

Statistics show that private banks’ capital rose to 5.9 trillion Iraqi dinar, a result of the

execution of the Central Bank’s instructions to increase the banks’ capital. The private

banks still possess the largest portion of the total capital, a percentage of 78.7%. Private

banks’ capital is distributed as follows: 53.5% with traditional banks, 22.5% with Islamic

banks, and 2.7% with branches of the foreign banks working in Iraq. The state-owned

banks represent 21.3% of the banking system’s total capital, and the banking system’s

capital percentage of GDP reached 2.4% in 2012.

This means that the banking system is still modest in its structure and in the percentage of

its contribution to GDP. Despite the fact that private banks dominate a large percentage

of the banking system’s total capital, the public sector has a complete monopoly over

government financial transactions.

2 The 2012 Yearly Statistical Bulletin – The Iraqi Central Bank/ The General Directorate of Statistics and Research

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79%

21%

The Percentage of the Banking System's

Capital by Sector

Private Sector

Public Sector

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The Structure of the Iraqi Banking System

The Central Bank of Iraq

State-owned Banks

Rafidain Bank

Rasheed Bank

The Industrial Bank

The Agricultural Bank

The Real Estate Bank

The Bank of Iraq

Trade Bank of Iraq

Private Banks

Bank of Baghdad

Iraqi Commercial Bank

Waraka Bank for Investmentment

Middle East Bank

Iraqi Investment Bank

United Investment Bank

Dar es Salaam

Mosul Bank for Development

Babylon Bank

Basrah International Bank

National Bank of Iraq

Credit Bank of Iraq

Emerald

Mansour Bank for Investment

Union Bank

Economy for Investment

Sumer Commercial

Gulf Commercial

Erbil

Ashur International

North Bank

Huda Bank

Trans Iraq Bank

Islamic Banks

Iraqi Islamic

Elaf Islamic

Kurdistan International

National Islamic

Djlah & Furat

Islamic Cooperation

Al Bilad Islamic

International Development

Cihan

Turkish Al-Baraka Bank

Vakif Bank (Turkish Company)

Abu Dhabi Bank

Foreign Banks

Arab Banking Corporation (Bahrain)

Turkish Agricultural (Cziraat)

Bank Melli in Iran

Lebanese Byblos Bank

Intercontinental

Beirut and Arab Countries

Turkey Is Bank

Parisian Bank

Credit Libanais

Mediterranean Bank

Turkish Asia

Banque Libano Francaise

19 19

Third: Bank Credit:

At the end of 2012, the total balance of the credit granted by banks amounted to 20.8

trillion Iraqi dinars. Bank credit granted constituted 8.5% of the Gross Domestic Product,

and the credit provided to the private sector for the year 2012 reached 14.6 trillion Iraqi

dinars, with a relative importance of 70.5% of the total credit granted, whereas the credit

granted to the public sector was 5.3 trillion Iraqi dinars, with a relative importance of

25.9%.3

Fourth: Bank Deposits:

With the exception of the central government’s deposits and deposits of an ongoing

nature, in 2012 the deposits of commercial banks operating in Iraq amounted to 42.5

trillion Iraqi dinars. The banking system’s total bank deposits amounted to 245.2 trillion

Iraqi dinars and accounted for 17.3% of the Gross Domestic Product.

In analyzing the structure of deposits for 2012, it is notable that continuing deposits

dominate the largest share of total deposits, representing 78.1% of the total deposits made.

Such deposits were 33.2 trillion Iraqi dinars in 2012, whereas savings deposits reached

only 7.9 trillion Iraqi dinars, or 18.6% of total deposits.

The table below illustrates the amount of deposits and credit in banks in the public and

private sector:

Sector Deposits Relative Importance

Credit Relative Importance

Private 18.2 43% 14.6 73% Public 23.8 57% 5.4 27% Total 42 100% 20 100%

In trillions of Iraqi dinars

3 The 2012 Yearly Economic Report – The Iraqi Central Bank/ The General Directorate for Statistics and Research

20 20

0

5

10

15

20

25

Deposits Credit

18.2

14.6

23.8

5.4

Private

Public

21 21

Fifth: Observations on the current state of the banking system in Iraq are as

follows:

1. There is low banking density, wherein the ratio of banks to people is 1 bank per

45,000 people, compared to the banking density standard of 1 bank per 10,000

people. This has led to a low level of awareness about banking and prevented the

Iraqi economy from reaching the global level in this sector. Additionally, it

demonstrates a great need for raising awareness of banking within Iraqi society

and in the banks themselves, by improving and spreading banking services.

2. A familial character is prevalent in a number of private banks; that is, the

administration is united with the owner in these banks in order to serve the

family’s interests. In addition, banking culture is weak among some owners of

capital, so the banks are caught between the desires of those who own the capital,

the demands of the banking business, and compliance with the laws and relevant

regulations, which provide the foundation for the well-being of the banking

system4.

3. Effective general banking strategies are absent, as are detailed annual plans and

contingency plans. There is a lack of availability of all policies stipulated in the

Banking Law and the Central Bank of Iraq Law, as well as regulations issued by

the Central Bank of Iraq, which the board of directors of the banks must approve

for implementation.

4. Banking sector capital as a percentage of GDP reached 2.4% in 2012, meaning

that the banking sector is still limited in its structure and the rate of its

contribution to GDP.

5. Credit granted represents no more than 8.5% of the GDP in Iraq, which is a

percentage with limited effect in comparison with the rebuilding of a productive

Iraqi economy. This low percentage represents only how small the credit market

is in the country’s funding activity. Therefore, monetary policy still faces a large

challenge to strengthen credit granted by banks. The responsible banking system

should participate in this with a high rate of growth in economic activity through

aggregating savings resources and directing them towards productive activities

with attractive returns and the lowest risk possible.

6. Supporting institutions for the banking sector and its work are absent. These

institutions include insurance companies for deposits and others to insure loans,

offices to study and analyze banking risks, and companies to evaluate the

performance of banks and other institutions.

7. The services provided by Iraqi banks (with regards to their number, type,

procedures, style, or speed at which they are provided) are not in line with the

needs of the Iraqi economy’s development, nor the demands of a market economy,

4 Walid Aiydi – Study on the Iraqi Banking Sector Between Reality and Aspiration

22 22

and are weak in comparison with the number and type of services provided by

Arab and international banks.

8. The technology used by banks is weak, and fast and modern communication

methods required by new workplace conditions are lacking. In addition, software

appropriate for improving the banks’ work is lacking. This software is necessary

for expanding and improving banks’ services, and enabling them to monitor and

control in order to implement necessary policies to avoid risks, improve

performance, and expand services.

9. The administrative structure in a large number of banks is weak, particularly in

state-owned banks, which suffer from weak experience and lack of modern

banking techniques.

10. An inability to implement effective oversight and achieve the necessary

correctional procedure.

11. There is an increase in the volume of outstanding loans and the financial

allocations to confront them are weak. There is also an inability to take drastic

measures to liquidate guarantees provided to meet them.

12. The banking market still does not encourage the provision of an acceptable

amount of credit to private activities and does not remain current with economic

trends of the state’s role in promoting development and reconstruction, as well as

combatting unemployment, and economic recession, especially in the private

sector.

13. The budgets of state-owned banks are still burdened by formal accounting

restrictions that remain unaddressed, and by their outstanding indebtedness. Some

are burden by their lack of authentication by the Audit Bureau, while others are

burdened by unaddressed limitations.

14. Only the Iraqi Bank for Trade may open letters of credit, but it has the right to

delegate private banks to open letters of credit of less than 5 million dollars.

15. Foreign banks are still wary of opening branches in Iraq, and of twinning their

banks with Iraqi banks, due to the limited role and efficiency of Iraqi banks and

their limited relations with the global banking system.

16. The dominance of the public banking sector over the movements of the banking

market.

17. The Iraqi Central Bank Law and the instructions issued by the Ministry of

Finance, represented in Articles 27-33 of the Banking Law, still significantly

reduce banks’ work orientations, both for state-owned and private banks. These

articles identify prohibited activities and precautionary measures, restrict

investment, and limit bank activities to traditional banking practices.

18. Most banking activity is dedicated to financing public activity, which is burdened

with incompetence, underemployment, and accumulated losses, while preventing

the private sector from accessing the funding necessary to accumulate capital. In

23 23

addition, most of the state banking system’s investments - in particular those of

Rasheed and Rafidain Banks - are investments in treasury transfers, meaning that

the investment base is narrow and still confined to the tools of the government.

19. In general, the banking system’s banking services are limited to the processes of

lending and simple financing.

20. The banking system does not possess sufficient capacity to provide modern

banking products, such as investment portfolio management, etc. In addition, it

does not possess sufficient capacity to assess possible risks arising from bank

credit. Usually, bank credit provided includes significant collateral, which has

become a strain on investors.

21. The failure of the banking system to provide advanced services that require

developed payments systems, such as the developed clearing system, or

introducing advanced methods of payment on the level of the individual (credit

cards) or on the level of paying large financial transactions.

22. Most of the credit offered by banks (both public and private) is short-term credit

for commercial and consumer purposes, while banks refrain from providing long-

term credit in order to avoid risks. In addition, the banking sector focuses on real-

estate collateral when granting credit, and does not give importance to true

collateral like the assets of the project.

23. In order to raise credit’s percentage of the GDP from 10% to 55% (the average

percentage in the Middle East and North Africa), the credit provided by banks

must be increased by 45 trillion Iraqi dinars5.

24. Only 5% of small and medium sized enterprises received bank loans.

5 The World Bank’s Comprehensive Report on the Financial Situation in Iraq in 2011.

24 24

-Chapter Two-

The Role of the Central Bank and Its Regulations

Iraq’s Central Bank is one of the oldest central banks in the region. It was founded in

1947 and has branches in Basra, Mosul, Erbil, and Sulaymaniyah. The bank’s goal is

independence in the creation and execution of its monetary policies and the carrying out

of its other duties. Its new law, No. 56 from 2004, was passed and provides for its

financial, administrative, and legal independence.

The Central Bank, through a group of legal and technical procedures and through its

monetary tools, contributed in activating the mechanism for transformation to a market

economy. The second paragraph of the law’s second article states that the Central Bank

of Iraq shall enjoy independence in its efforts to achieve its goals and shall not take

instructions from any person or entity, including government entities, except as otherwise

specified by law. This is in addition to respect for the Central Bank’s independence. This

is consistent with Article 26 of the above-mentioned law, which forbade the Central Bank

from lending to the government or any public body owned by the state, directly or

indirectly, with the exception of the purchase of government securities in the framework

of the operations of the open market.

The independence of the Central Bank is demonstrated in the following6:

It is responsible to the Council of Representatives according to the provisions of

Article 103 of the Iraqi constitution, and it is not subordinate to any other body,

based on the above-mentioned Central Bank Law.

Its relationship to the Council of Representatives is based on law No. 56 of 2004.

The fact that it does not lend to the state, its institutions or its agents except in the

case of public government debt bonds, except in the secondary market. This is

based on the provisions of Article 26 of its law.

The auditing of its accounts by an international auditor, as well as by the Board of

Supreme Audit, according to international standards.

The publishing of its reports and its financial statements, which shall be available

to various institutions and to the public.

The Central Bank’s duties include:

6 Walid Aiydi – The Iraqi Central Bank and the Development of its Monetary Policy and Bank Oversight

25 25

1. The creation and implementation of monetary policy in Iraq.

2. The possession and management of all of Iraq’s official foreign currency reserves

according to Article 27, with the exception of the government’s operating

balance.

3. The possession of gold and the management of the state’s gold stock.

4. Providing advisory and financial services to the government according to the

fourth section of its law.

5. Providing liquidity services to the banks according to the text of Articles 28 and

30 of its law.

6. Issuing and managing Iraqi currency according to the seventh section of its law.

7. Compiling and issuing banking and financial system statements and economic

statements according to the text of Article 41 of its law.

8. Licensing and regulating the work of banks, as well as supervising the banks and

their branches to ensure compliance with the provisions of the Banking Law.

9. The Central Bank is considered the general supervisor and monitor of all of the

banks.

10. Additionally, it is permitted for the Central Bank of Iraq to take the steps that it

deems necessary to accomplish the following:

A) Combatting money laundering based on law No. 93 of 2004

B) Establishing rules regulating the work of lending companies, companies

providing small loans, and any non-banking financial institutions that are not

subject to regulation under Iraqi law, and supervising these entities.

11. The Central Bank has the authority to appoint guardianship for the banks, and

banks shall not be liquidated except by the approval of the Central Bank.

12. The Central Bank of Iraq has the authority to issue all of the regulations necessary

to implement this law and to carry out its tasks, and to issue the Rules of

Procedures and general guidance on bank regulation and management.

The task of preparing and executing monetary policy is among the most important tasks

that the Central Bank carries out in order to achieve economic stability, improve the

dinar’s foreign exchange rate, and achieve economic prosperity.

The relationship between the Central Bank and the banking system is regulated

according to the provisions of the Central Bank Law No. 56 from 2004 and the

Banking Law No. 94 from 2004.

The banks are subject to oversight and monitoring by the Central Bank, from the point at

which they are granted a license or a permit, to the liquidation of a bank whose

performance has failed, according to the legal frameworks found in the provisions of

these two laws.

26 26

Through its oversight role, the Central Bank strives to achieve two primary goals: the

soundness of the national economy and the protection of depositors’ funds. Most of the

pertinent articles in the Central Bank Law No. 56 from 2004 and the Banking Law No. 94

from 2004 include the achievement of these two goals.

The law gives the Central Bank the right to direct banks to exert the utmost efforts to

encourage the public to deposit savings, and to invest these savings in a manner that is in

line with the goals of the plan that the state created to develop the national economy.

The Directorate General for Banking and Credit Control has two primary methods for

overseeing the banks. The first is the office method which depends on reviewing the

statistics and information that the banks must publish by law. The second method, the

field method, is based on periodic and non-periodic field visits to banks to inspect and

examine their financial conditions and to review their application of the provisions of the

Banking Law and the instructions therein, the most important of which are:

1. The audit of the records, statements, and information that the banks send to the

Central Bank

2. The study of the facilities granted by the banks to confirm the soundness of their

assets

3. The degree to which the banks protect the rights of depositors

4. The oversight and safety methods used by the banks’ branches to protect their

assets

5. The observation of the degree of adequacy of the procedures for internal review in

the bank

In support of the oversight authorities of the Central Bank and to increase its

effectiveness, Article 56 of the Banking Law states that administrative and criminal

penalties will be imposed on banks that are found in violation. The article relies on

proportionality according to the gravity of the violation and its financial and economic

ramifications on the national economy and on the bank’s resources, including the public’s

deposits. These punishments could extend to stripping of the violating bank’s banking

licence.

In light of the preceding, the Central Bank continues its monetary policy in the context of

achieving its operational and intermediary goals, which are maximizing the purchasing

power of the Iraqi dinar and addressing inflationary expectations in a manner that

strengthens the performance of the macro-economy in general and, specifically, its

effects on the improvement of the standard of living.

27 27

-Chapter Three-

Monetary Policy Tools

Under the new Central Bank Law, monetary policy in Iraq is on a new path that is

completely different from the previous one in terms of tools used to execute monetary

policy and goals. These goals range from curbing inflation, stabilizing prices, and

maintaining a stable monetary and fiscal system to realizing economic welfare with

special emphasis on strengthening the value of the Iraqi dinar so it becomes an attractive

national currency, and limiting the phenomenon of dollarization7.

The recently applied monetary policy tools are indirect, quantitative measures that

include legal reserves, the open market, the discount rate, and the foreign currency

auction in addition to dependence upon a nominal peg such as the Iraqi dinar exchange

rate and the interest rate - the most important tools used to limit inflation, reduce

liquidity, and increase the value of the dinar. These tools also include some decisions and

steps that the Central Bank of Iraq has taken since the new law allowed it to make

decisions independently in 2003. In particular, the Central Bank is no longer subject to

the financial or political decisions that previously had made it the primary financier - or

leverager - of the state budget deficit. All of this contributes to designing monetary

policies that serve economic stability and social welfare.

Based on the above, the fiscal policy tools and their uses will be discussed as follows:

First: The Foreign Currency Auction:

The Central Bank used the daily auction method to buy and sell dollars in order to control

the money supply and regulate liquidity levels to reduce inflation, achieve stability at the

general price level and meet banks' and citizens' demand for dollars.

The auctions began in 2003 and continue to be held. The Central Bank has become the

centralized foreign currency market where the currency auction works to achieve the

following goals.

- Exchange rate stability between the dollar and the dinar.

- Building up reserves of foreign currency

7 Professor Thuraiya Al-Khazarji- Monetary Policy in Iraq Between the Legacy of the Past and the Challenges of the Future

28 28

- Stimulating the secondary monetary market via the development of the procedure

for the buying and selling of currency by commercial banks.

- Increasing the interdependence between the exchange rate and the interest rate to

create deeper coordination of foreign exchange operations

Second: Existing Facilities

The existing facilities seek to offer banks the security to manage their excess liquidity

within moderate interest rate levels8 that expand the goals of monetary policy related to

short term interest rates. This is done by employing the monetary policy rate as an

indicative price, in addition to the currency exchange rate used in interbank operations

(the Interbank).

Third: Existing Loan Facilities

The existing loan facilities came into effect in 2004. The Central Bank grants facilities to

banks based upon the basic objectives of monetary policy for the purpose of preserving a

regulated, sound, and secure fiscal regime. These facilities include:

- Primary Credit: The Central Bank grants primary credit as a source of financial

support to banks that are sound from its perspective. The banks use this credit as

no more than 20% of their capital for a period lasting no longer than 15 days. It is

subject to extension with the agreement of the Central Bank and is at an interest

rate two points above the monetary policy rate.

- Secondary Credit: Secondary credit is short-term credit offered by the Central

Bank to banks for one month at a rate three points above the monetary policy rate.

It is a source of support for banks that are unable to arrange for market financing.

Fourth: Facilities of Last Resort

In exceptional circumstances, the Central Bank offers credit to a bank that is, from the

perspective of the Central Bank, able to meet its obligations. In these cases, the Central

Bank provides the bank with suitable funds in order to improve its liquidity. In this case,

the Minister of Finance has issued the Central Bank a written guarantee on behalf of the

government to repay the loan, and in return the bank presents to the Central Bank the

programme it will employ to improve its liquidity and revert to dependence on market

sources of finance. The Central Bank sets interest at a rate three and a half points above

the primary credit rate and the facility is accessible for periods no longer than three

months, and may be extended by Bank decision.

8 Dr. Sinan Al-Shabibi – The Characteristics of Monetary Policy in Iraq

29 29

Fifth: Existing Deposit Facilities

The existing deposit facilities came into effect in 2005 and only accept deposits

denominated in dinars and dollars in order to absorb surplus liquidity and invest it with

interest for 7 days if banks wish to do so. Currently, this interest is credited at a 5%

annual rate based upon a 365 day year but this rate changes from time to time according

to economic circumstances. The bank’s overnight deposit is not credited towards its legal

reserve requirements.

Sixth: Legal Monetary Reserve

Legal monetary reserves came into effect in 2004. Banks are required to keep 10% of

total deposits in their coffers, as well as 5% of total deposits as liquid currency.

Seventh: Treasury Transfer Auctions

The treasury transfer auctions came into effect in 2004. They are short-term transfers

from domestic public debit that are issued by the Ministry of Finance for different periods

of time in order to finance a temporary deficit in the general budget. From the sale of

these transfers, the Central Bank seeks to control general liquidity by influencing the

credit multiplier, as these transfers are one of the investment types available to the public

and the banking sectors.

Eighth: Interbank Lending

Interbank lending is a means of managing liquidity because banks prefer to borrow from

each other before resorting to borrowing from the Central Bank. The loans are

characterized by low interest rates, are temporary, and are reclaimed upon request.

However the current situation in Iraq is marked by weak cooperation between

government and private banks, and among the banks themselves.

If the enactment of the market mechanism and start of reforms is desired, the relationship

between the existing monetary and fiscal authorities needs to be based upon consultation

on various decisions and procedures. This is done by establishing monetary policy that

uses quantitative tools to regulate the movement of economic monetary variables like the

general price level and to carry out structural corrections in the financial sector in order to

expand the use of quantitative tools for fiscal policy and develop and stimulate the

financial and fiscal markets.

30 30

-Chapter Four-

Bank Reform Strategy

This reform aims to establish a banking system capable of mobilizing and allocating

financial resources and improving capacity to serve economic activity in order to achieve

continual high economic growth rates. This reform modernizes and strengthens the

banking sector by bringing about major changes in the nature of the banking industry and

restructuring it to mobilize domestic saving, limit capital flight, and attract foreign

investment flows.

For the banking systems’ reforms to be effective, they need to be part of a more

comprehensive strategy of change and reform. The strategy is embodied in the

liberalisation process of this sector, which is done by keeping pace with developments in

international banking. These developments are primarily based upon freedom from

constraints and restrictions, the creation of a suitable legislative environment, increased

competition between banks, the use of advanced information technology, and the

implementation of the Basel rules in order to work according to the international

standards for banks, and thereby increase Iraqi banks’ capacity to compete in the

international arena9.

The Finance Committee found that the most important causes of delay in the

process of bank reform can be summarized as follows:

1. Procrastination in issuing legislation that moves reform forward.

2. Lack of clarity in the economic vision and policy, and lack of coordination

between financial and monetary policy.

3. Implementing plans for reform prepared without the input of banking experts and

specialists.

4. The prevailing regulations, laws, and procedures that restrict banks’ business and

limit their expansion and development.

5. The field has not been opened up for banks to engage in investment and

financing, given banks’ maintenance of high liquidity.

6. The lack of a domestic vision for the future of the banking reform process, put

into place by those implementing this process. The nature of the banking sector

9 The Iraqi Institute for Economic Reform- Evaluation of Bank Reform Policy in Iraq.

31 31

and the problems it faces require a special conceptualization that meshes our

current reality with ongoing foreign experiences and puts these experiences in a

framework appropriate to our domestic reality.

7. The interrelationship between the different relevant authorities: the Central Bank,

the Ministry of Finance, state-owned and private banks. An example of this is the

Ministry of Finance issuing instructions related to the inadmissibility of securities,

bills of exchange, and letters of credit from the banks.

8. Administrational domination and the subordination of state-owned banks and

their boards of directors.

9. Administrative corruption and bureaucratic behaviors within the banking

institutions’ administrational hierarchy

10. The general state of the Iraqi market and the macro-economy.

11. To date, we have not yet reached the necessary level of transactional

transparency. The disclosure of data and the exchange of information remain

weak.

12. Caution and distrust continue to hinder people’s interactions with banks. They

still prefer to deal in cash instead of checks, while instability has prevented the

expansion of automated transactions – such as the spread of ATMs and the use of

credit cards.

13. Due to the slowness and ineffectiveness of the reform process, costs and

communal financial burdens have gone from bad to worse and administrative

desires have been forced to succumb to the pressures that these costs and burdens

have produced. This hurts growth prospects in Iraq by cementing the patterns and

values of dependence upon the state and its central role in the economy rather

than dismantling them and replacing them with market values, competitiveness,

and productivity.

14. Following a set of procedures that have led to inefficient resource mobilization

and allocation and so burdened the banking sector with structural deficiencies

which include10

:

A. The Policy of Fiscal Restraint

10 Waad Al-Mashadani – Financial and Banking Reform in Iraq

32 32

In general the monetary policy regime in Iraq has been characterized by the use of

administrative controls on the movement of interest rates and the size of credit. Deposit

and loan interest rates have been controlled, causing the absence of the necessary linkage

between these rates, risks, maturities, and financial tools’ liquidity. Likewise, interest rate

levels sufficiently changed to reflect shifts in economic conditions, while the monetary

authority has depended upon means for direct control over credit expansion by imposing

ceilings on the credit that banks provide through controls and rules for allocation and

formation of credit.

B. Nonperforming Loans

The accumulation of nonperforming loans has limited banks’ abilities to perform their

tasks by reducing the liquidity available to them and increasing the cost of their

operations. Perhaps the heart of this problem goes back to weak central monitoring over

these banks.

C. Inefficient Payment Systems

The accounting system used slows the process of settling payments within the banking

system.

D. Poor Disclosure and Monitoring

Bank statements vary in accuracy and comprehensiveness from one bank to another.

Banks lack the required limits of disclosure, which makes it difficult to compare between

domestic and international banks. Bank statements need to be comparable based upon

uniform standards, and so there is a need to appropriately develop transparency

regulations and publish bank statements and data in order to monitor banks and attract

foreign investment.

E. Poor use of technology

Keeping pace with modern banking developments requires increasing the level of

investment in technology and a modern banking system that increases the speed of bank

operations and settlements and contributes to modernising statements and increasing

transparency to allow information to be publicized, and thereby increase investors’

confidence in banks. The use of modern technology also allows banks to expand and

diversify the services they offer to their clients.

33 33

The Decisions of the Basel Committee and Challenges to Reform

Basel I*

The spread of free banking units occurred at the same time that the Third World debt

crisis began to worsen. With the increase in volumes in loans of doubtful repayment

made by major global banks, especially American ones, some banks failed and their

branches spread outside their home country. This is in addition to the sharp competition

between Japanese and western banks. After discussing these issues and their effects on

the activities of commercial banks, the Basel committee decided to create unified

standards for adequate capital. They set a minimum ratio of capital to risk-weighted

assets and liabilities.

Basel II

Due to numerous criticisms directed at Basel I, the Basel Committee decided to develop

the framework of Basel I and create a new framework called “Basel II.”

The new agreement for capital had included a group of complicated recommendations

that will create many challenges for financial and banking institutions, their non-banking

competition, customers, rating agencies, regulators, and global capital markets, on the

level of regulation, operation, and risk management.

The new agreement is based on three fundamental pillars:

The first pillar: Minimum capital requirements.

The second pillar: Supervisory review process.

The third pillar: Market discipline or disclosure requirements.

Basel III

After the global financial crisis subsided, its effects remained for a long period of time.

These effects include great financial losses and economic collapse, which affected a large

* The Basel Committee’s requirements seek to strengthen confidence in banking transactions. Adhering to these requirements acts as protection and comprehensive oversight of the bank’s activities. This protection covers the depositors, borrowers, and the bank itself. The Basel Committee (for banking systems and oversight practices) is composed of representatives of the oversight authorities in the Central Banks of the Group of Ten: Canada, France, Japan, Italy, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States of America. The committee held its meetings, under the chairmanship of the English Cook, in the Swiss city of Basel, which is the headquarters of the Bank for International Settlements. This is why the committee is named ‘Basel’.

34 34

number of international institutions. These effects extended to a number of advanced

economies in Europe, America, and Asia. Parallel to the efforts to manage the crisis and

deal with its effects, the centers of decision and policy making in international bodies and

organizations began to search for weak points in systems of control and oversight. These

weak points prevented containment of the crisis at its beginning, making it impossible to

avoid. It was natural that people would look to the organization responsible for drafting

the standards for discipline, monitoring, and oversight over the banks. This organization

is known as the “Basel Committee.”

This committee, which comes out of the Bank for International Settlements, met to study

the new procedures that banks and financial institutions must take into account in their

work to improve performance and to avoid the large breaches that led to the financial

crisis. The most important step expected here is the agreement that banks are obligated to

increase their capital at large rates commensurate with the size of the risk in their

operations. This is so they are able to face any crises that may occur as a result of

excessive speculation and hidden manipulation in the prices of stocks and bonds. In these

cases, the bank’s capital is the safeguard with which it can face a crisis, instead of relying

on the money of the government, as this threatens national economies.

Difficulties Facign Iraqi Banks in Implementing the Basel Decisions11

The Iraqi banks still face, and will face in the future, a number of difficulties and

challenges to the implementation of the contents of the first and second international

Basel agreements, in addition to the new, third Basel agreement. The most important

challenges are:

1. The difficulty of estimating the amount of capital required based on the amount of

actual capital.

2. The clear lack of interest in risk management

3. The incompatibility of the applied accounting systems with international

accounting standards.

4. The absence of a comprehensive, precise database that can be relied upon.

5. The need for a kind of coordination between global credit rating agencies, given

the importance of this rating to the implementation of a standard approach to risk

management.

6. Failure to disclose risks, and the accounting policies for evaluating the bank’s

assets and liabilities and for allocation, as well as failure to disclose the bank’s

own strategy for dealing with risks.

11 Hisham Abdul Jabbar – Paper presented to the first Iraqi Banking Conference, organized by the

Association of Private Banks in September 2013.

35 35

7. The total assets and capital of the Iraqi banks is still small in comparison with

global banks.

8. Failure to keep up with the developments of the international banking industry.

Bank Reform Strategy:

Based upon the above, reforming the banking sector has become a strategic necessity. In

its current state, the banking sector is not able to progress to the level of new, exceptional

banking, because it lacks strategic thinking in modern administration, change and

development, and institutional work. As a result, it is not commensurate with the level of

Arab and foreign banks. Therefore, a reform strategy requires the following:

1. Diversifying and developing the products and services of the banking sector and

creating new products that meet all of the clients’ needs in both the individual and

institutional sectors.

2. Accelerating the modernisation of the electronic distribution channels that provide

clients with services at the appropriate time and place by increasing the use of

banking technology.

3. Strengthening the concept of quality management and integrating it into banking

operations by designing, implementing, and continuously developing business

quality management systems according to international standards.

4. Building a broad base of qualified and trained leaders capable of managing banks

in manners that ensure their growth, development, and adaptation to changes and

developments in the modern banking industry.

5. Encouraging banks to launch joint investment funds to expand the opportunities

available to them to invest their deposits.

6. Creating a banking legislative environment that allows for the development of the

banking system via the passage of a new banking law that matches current and

future developments related to the banking system. This is what the Finance

Committee desires.

7. Activating the role of the Union and Association of Iraqi banks.

8. Encouraging banks to open more branches and offices in all of the provinces.

36 36

9. Encouraging mergers between private sector banks to create major banking blocs

that contribute to lending to and financing large projects.

10. Establishing the highest standards of disclosure and transparency within the

banking sector in order to strengthen citizens’ confidence in dealing with banks.

11. Implementing the best international practices and behaviors in order to achieve

additional integration between the economy and reform at all levels by

implementing Basel I, II, and III, and focusing on strategies and policies to

manage credit risks, market risks, and operational risks, as well as the liquidity

risks and electronic banking activity risks mentioned in the supporting documents

of Basel II, which our banks must commit to implementing.

12. Forming a high commission for bank reform in Iraq that includes the Economic

Committee in the Cabinet, the Finance Committee and the Economic Committee

in the Council of Representatives, and the Central Bank, along with a group of

economic and banking experts and consultants in the private sector. This

commission shall be responsible for creating a strategy for the Iraqi banking

sector to contribute to economic growth, and shall determine mechanisms for

reform.

13. Developing banking training centres that work to develop banking capabilities in

Iraq and produce research and studies. All banks may benefit from these centres,

using them to build the capabilities of their employees or of those who wish to

work in the banks, whether in the public or private sector.

We believe that the above will contribute to drafting a strategy to reform, develop, grow,

and stabilize the banking sector as an essential component of economic stability.

37 37

-Chapter Five-

Islamic Banking

Islamic banks are part of the essential economic structure of society. They have begun to

play an important role in developing the state’s economy through their mechanisms

dedicated to funding and investment. These mechanisms are different from the funding

and investment mechanisms of traditional banks, since they work according to the

provisions of Islamic Sharia, without bank interest. Their work mechanisms provide a

great deal of confidence and security in these banks for those who work with them.

A number of Islamic banking institutions have been established, beginning in 1940 in

Malaysia and then in 1975 with the founding of the Dubai Islamic Bank and the Islamic

Development Bank in Jeddah. The International Union of Islamic Banks appeared in

Mecca in 1977 as a tool to support connections between Islamic banks, strengthen

cooperative ties between them, coordinate their activities, affirm their Islamic character,

and work to spread the concept of Islamic banking. Islamic banks entered the banking

market in non-Islamic countries, as is the case in Britain, where the first Islamic bank was

founded in 2004 under the name ‘Islamic Bank of Britain.’ This is also the case in

Denmark, and of the International Islamic Bank in Luxembourg. There are also Islamic

banks in the United States of America, such as Al Baraka Bank in Texas12

Islamic banks and their legal regulation have evolved, though legislation related to this

type of banking is still new. A group of Islamic banks emerged in countries whose entire

banking system has become completely governed by the rules of Islamic Sharia, as is the

case in Iran and Pakistan. Islamic banks have also appeared in countries that created

partial regulation for Islamic banks, while their traditional banking systems remain in

place as the commonly used system, as is the case in the Emirates, Kuwait, Malaysia,

Turkey, Iraq, and Lebanon. Other countries, such as Egypt, Sudan, Bahrain, and Jordan,

exempt Islamic banks from the systems and rules to which traditional banks are subject.

We find that countries have begun to create special legal rules related to Islamic banks, as

is the case in Lebanon where a law establishing Islamic banks was issued.

The number of Islamic banks and banking institutions reached more than 500 in 2012,

and managed assets amounting to 1.3 trillion American dollars in 2012. Islamic banking

activities began in Iraq in 1993 with the establishment of the Iraqi Islamic Bank for

Investment and Development. This was followed by the establishment of a number of

Islamic banks after 2001. There are currently 12 banks with Islamic business activity in

12 Mustafa Matloub – Obstacles to the Work of Islamic Banks and Ways to Treat Them and Develop

Them

38 38

Iraq, in addition to the fact that some state-owned banks have opened an “Islamic

window.”

Currently, Islamic banks in Iraq work according to the Banking Law No. 94 from

2004, and regulations from the Central Bank.

With all of these different trends in adopting the Islamic banking system, problems arose

that stand in the way of the progress and expansion of these banks. This is despite the

successes that Islamic banks have achieved on domestic and international levels. We will

try to present the major problems and also to present the appropriate solutions that will

lead to flourishing progress and wide expansion for these banks.

Major Problems Affecting Islamic Banks:

1. The current Islamic banks are superficially Islamic because there is no legislation

that regulates the work of these banks. The Iraqi Banking Law No. 94 from 2004

did not deal with Islamic banks. The absence of strict legal regulation for these

banks in Iraq is one of the fundamental problems. They are currently operating

with contracts and work that have prevailing interest rates. An example of this is

transactions with interest at the time of clearing or settlement.

2. The Islamic banks are subject to the same standards that the Central Bank applies

to other banks.

3. There are no diverse Islamic methods or tools that represent an alternative to

personal loans.

4. There are no departments for Islamic banking economic studies to guide the

Islamic banks.

5. The banks lack personnel qualified for Islamic banking work. Likewise, there is a

lack of understanding of the work mechanism of these kinds of banks and the

huge competition that they face from traditional banks.

6. The lack of coordination between the Sharia institutions for Islamic banking and

Islamic banks’ managements, which could lead to work confusion and conflicting

fatwas [Islamic legal opinions] in many of the Islamic banks.

7. The newness of the experiment and lack of experience on the part of both the

banks’ workers and those who deal with the banks.

8. The weakness of modern technical and technological capabilities of many of the

Islamic banks, which is truly a huge challenge to the evolution of the Islamic

banks and the advancement of their practical reality in economic life, especially

after the emergence of electronic banks that use modern technology.

39 39

9. The focus of funding policies in Islamic banks on short term projects such as

commodities investment, leasing, installment sales, and Murabaha [a type of sale

compliant with Sharia in which the seller expressly mentions the cost he has

incurred on the commodities for sale and sells it by adding some profit or mark-

up], which led to deviation in methods of investment and funding.

10. Funding is given to short-term projects and Murabaha, while large projects that

could benefit the state and society are neglected. One of the reasons for this is the

fact that these banks’ rate of investment is limited to 20% of its total capital, a

percentage that is not commensurate with the amount of money available to them

for investment.

11. The absence of an Islamic financial market, which is one of the necessities of

distinguished investment. These banks suffer because they do not have the

financial tools that result from the presence of financial markets. These include

the ability to change short-term resources payments into long-term investments

and funding. Islamic banks do not have the tools that enable them to attract long-

term financial resources. The financial tools that Islamic banks work with are

limited to current deposits, investments, and savings deposits, which mature in a

short period of time.

12. The difficulties and problems related to the Central Bank’s power of oversight

over the Islamic banks are similar to the problems of traditional banks that deal

with interest, taking when they give credit and giving when they receive deposits.

Therefore, when the Islamic banks are in need of liquidity they do not go to the

Central Bank because it imposes interest on the loans that the Islamic banks grant

or on transactions discounting commercial paper, which conflicts with Islamic

Sharia.

13. The problem of affluent debtors being late in payment, which is one of the major

problems facing Islamic banks. It is a problem that the traditional commercial

banks do not have, because when the debtor is late in payments to these banks, he

must pay interest, which increases with the passage of time. In contrast, this

problem impedes the activities of Islamic banks because Islamic Sharia forbade

conditional increases on capital. Here, the debtor finds an opportunity to avoid

paying because he knows that Islamic banks will not add interest to the debt of

those who are late in payment.

Based on what the Committee has found, and in order to create an environment

suitable to the work of these banks so that they can play an increasingly important

role in the banking and financial sectors, in order to participate in the economic

development of Iraq, the Committee finds that the following is required:

1. Passing a law for Islamic banking because the current Banking Law No. 94 from

2004 does not include any mention of Islamic banking. This subjects Islamic

40 40

banks to the same regulatory controls that are imposed on traditional banking,

which hinders their activities to a certain extent because of the difference in the

nature of the activities of these two types of banks.

2. Permitting the creation of funding models and financial tools that meet the needs

of the Islamic banking industry. This development ensures the efficient allocation

of resources and the development of these tools is also a goal. This can be adapted

as a means to increase the efficiency of savings mobilisation and to practically

direct investments and the different funding reserves.

3. Giving Islamic banks to right to own moveable and immovable assets, to sell

them, invest them, trade them, and lease them. This includes reclaiming owned

and leased lands, and preparing them for agriculture, industry, tourism, and

housing. This also includes the founding of companies and shares in projects

under construction in fields that are compatible with Islamic Sharia, through

carrying out Islamic activities that are in the interest of the customers or in

partnership with them.

4. Additionally, paragraph 20 of Article 33 of the existing Banking Law must be

amended. It states that “Except in connection with the granting of mortgage loans

in the conduct of its banking operations, it shall be prohibited for any bank to

possess real estate other than the real estate essential to the conduct of its

operations and for the housing of its employees and workers. This provision shall

not bar the bank from leasing any excess portion of its real estate…” This is

because the above paragraph contradicts the nature of the activity discussed in

number 1.

5. That the percentage of the legal reserve requirement of Islamic banks be lowered

to limits appropriate to the manner in which these banks deal with assets. This is

to enable these (investment) banks to carry out the duties entrusted to them by

their founding contracts. These duties are funding and participating in investments

because of the presence of the legal and actual justification, which are the assets

of these banks. The practices of these banks are more cautious towards risks, as

has been proven globally.

6. Permitting the issuing of investment certificates without interest. Their use and

circulation will be available in the financial and banking system, and to

individuals (according to the mechanism for Islamic Sukuk). The goal of their

issuance shall be the public funding of domestic projects. Their issuance shall be

according to the principle of the permissible loan. They will be for different

maturities, as an alternative parallel to government bonds. Also, the Central Bank

can use these certificates as one of the tools of the open market. Likewise, they

are a tool that the Islamic banks can use to invest their cash surpluses (as in the

case of Bahrain and Qatar.)

41 41

-Chapter Six-

The Bank Supervisory Authority

In recent years the international financial system has evolved faster and into more

complex bureaucratic organisms raising serious questions as to the adequacy of the

structures of financial regulation. This was made particularly clear by the financial crisis

that began in 2007, culminating in the failure of Lehman Bros. It became clear that there

had been a serious malfunction and a complete overhaul of all aspects of global financial

regulation was necessary.

This reform process is still underway, although considerable efforts in the USA and

Europe have already been made, particularly on the domestic front. It is against this

background that the Finance Committee decided to embark upon its inquiry and this

chapter concentrates on the requirement of an independent banking regulator as the key

issue in making the necessary changes to the Iraqi banking network to bring it up to the

new international standards required.

1- General Principles of Sound Banking Regulation:

At the Banking Conference in Amman13

, the Committee discussed with David Green and

representatives from Standard Chartered Bank the principles of good regulation which

included:-

a. Good dialogue between all bodies and parties involved in regulation.

b. The use of experts, and avoidance of patronage.

c. The regulatory body should be as neutral as possible.

d. Regular and open audits of banks.

e. Sound and transparent financial reporting. 14

However, it is necessary to identify the kind of principles that banks should adopt, and

where it is possible, to determine that, legally, they must be enforced. These include:

a. A bank must conduct its business with integrity.

b. A bank must conduct its business with due skill, care and diligence.

c. A bank must have adequate risk management systems.

d. A bank must maintain adequate financial resources.

e. A bank must pay due regard to the interests of its customers and treat them fairly.

13

The Conference on Banking Regulation and Supervision in Amman in March 2013. 14

A research paper by David Green, Prerequisites for Sound Financial Supervision in Iraq presented

during the Amman conference.

42 42

f. A bank must manage conflicts of interest fairly, both between itself and its

customers, and between one customer and another.

g. A bank must arrange adequate protection for client’s assets when responsible for

them.

h. A bank must deal with its regulators in an open and cooperative way and must

appropriately disclose to the regulator anything related to the firm that the

regulator might reasonably expect to be informed of.

RECOMMENDATION: The government should identify which principles should

be incorporated within current legislation and delegate the monitoring and

enforcement to the supervisory body.

2- Supervisory Responsibilities, Objectives and Powers:

The responsibilities of the supervisory body need to be clearly defined in legislation and

publicly disclosed. The supervisory body has to have a legal framework to set and

enforce minimum prudential standards for banks, including setting different standards for

individual banks, based on their systemic importance and risk profile. It is vital that laws,

regulations and prudential standards are regularly updated in the light of changing

circumstances. The supervisory body must have access to bank’s boards, management,

staff and all records to review compliance with both internal and external rules. It must

also be able to supervise the activities of foreign banks within its jurisdiction.

The supervisory body has to have the power to take, or require a bank to take, timely

corrective action if it is in breach of regulations or engaging in unsound practices. It must

have the power to impose sanctions or be able to revoke a bank’s licence if necessary.

The Committee discovered that countries organise their supervisory and regulatory

arrangements in different ways. There is no one recommended structure and no particular

model has shown itself to be significantly better or worse than others at averting

problems in the financial system. Each has advantages and disadvantages, so the

committee discussed the various options available.

The Committee decided to concentrate on banking but recognises that insurance and

investment should be included as soon as possible.

The most common model is for a single, integrated regulator. This could be undertaken

by the Central Bank, at least initially, with a view to establishing a separate and

independent regulator in the near future. It was noted during the Committee’s visit to

London where it met with the Financial Services Authority (FSA) that the UK

43 43

government had decided take responsibility for banking supervision from the FSA and

return it to the Bank of England (the Central Bank) in light of the banking crisis in the

UK.15

The FSA will be reorganised to cover all other financial regulation and renamed

the Financial Conduct Authority.

RECOMMENDATION: The government should confirm that the Central Bank of

Iraq be the authorised regulator, and should carry out a full investigation into the

merits of establishing an independent Financial Authority to oversee all other

financial institutions, which may also include banking services in the future.

3- Corporate Governance of Banks:

Whilst regulation and supervision are vital to ensuring proper control and oversight of

banks, without sound governance arrangements the banks will not be run well and the

supervisory body will not have a reliable counterpart through which to exercise its

supervision. The boards and managements of banks are in need of effective oversight of

their business, in line with its risk profile. In larger banks this will mean separate audit

and separate committees for risk oversight and remuneration.

The Committee has seen the growing importance of these committees within new

legislation in other countries and supports the need for such arrangements for Iraqi banks.

It also recognises the need for proper arrangements for the appointment of board

members, including non-executives to provide independent input, particularly where

there are state shareholdings in a bank.

RECOMMENDATION: The supervisory body should have the powers to assess the

quality of governance arrangements including the appointment of all board

members and if necessary require changes in a bank’s board if it believes that any

individuals are not fulfilling their duties to the required standard.

4- Risk Management in Banks:

All banks must have a comprehensive risk management process to identify, measure,

evaluate, monitor and control or mitigate all material risks. Banks must assess the

adequacy of their capital and liquidity in relation to their risk profile, and the conditions

of the market and the macro-economy.

The supervisory body needs to determine that the bank has appropriate risk management

strategies and ensure they are regularly updated.

15

44 44

Banks need to have appropriate internal processes for assessing overall capital and

liquidity adequacy with appropriate information systems for measuring and reporting on

the size, composition and quality of their exposures on a bank-wide basis across all types

of risk.

RECOMMENDATION: The supervisory body should be given powers to inspect

banks’ risk management systems and demand changes where necessary. The

supervisory body shall be given adequate resources to undertake this task.

5- Financial Reporting and Audit:

Sound supervision relies on accurate and reliable numbers. There must be requirements

for financial statements to be prepared in accordance with international accounting

standards and practices. For most countries, these are the International Financial

Reporting Standards (IFRS).

The financial statements of banks need to be audited externally in accordance with

internationally accepted auditing standards. For most countries this means a version of

the International Standards on Auditing. The auditors need to be suitably qualified and,

ideally, supervised by a public audit oversight authority.

RECOMMENDATION: Legislation should be introduced to ensure that banks are

subject to both International Financial Reporting Standards (IFRS) and

International Standards on Auditing, within a reasonable timetable.

6- Business Law and Effective Courts:

In order for a financial system to function effectively there needs to be a basic framework

of business law that governs the relations between banks and their clients, such as

depositors, borrowers or other counterparties. Banks need to be able to make enforceable

contracts with their clients if they are to remain sound, and be able to manage their own

risks. This framework needs to include corporate, bankruptcy, contract, consumer

protection and private property laws.

These laws need to be consistently enforced so as to provide a mechanism for the fair

resolution of disputes through an efficient and independent judiciary.

45 45

RECOMMENDATION: Relevant improvements should be made to the current

business law and its enforcement to support the sound functioning of the banking

system.

7- Education and Training:

There is an urgent need to address the professional education and training requirements in

the financial sector and in banking in particular. Banks need to be encouraged to

establish new methods of professional training for all their staff. The government could

assist this process by supporting licensed banks to establish training colleges for this

purpose. This may also be undertaken through the establishment of a new banking

institute. Training programmes could also be established for employees in the financial

sector, in coordination with funding bodies.

It is also important to establish programmes for training the appropriate persons on the

implementation of IFRS and preparing financial reports according to International

Auditing Standards.

46 46

-Chapter Seven-

Future Steps

The Committee worked to focus on the steps that must be taken to begin studying the

legislative, regulatory, and supervisory requirements.

Therefore, this report is the first step towards a systematic organized plan for reforming

the banking system and the legislation related to it, and implementing international

standards in the medium term. In the future, the Committee will continue work on this

issue based on this report. It is also important that the Finance Ministry and the Central

Bank examine the recommendations found in this report with the goal of proposing

appropriate draft laws to the Council of Representatives for legislation.

The Finance Committee was careful to legislate a number of the laws related to the

banking system during the second parliamentary session. These laws include:

- The Law for the Islamic Mesopotamia Bank and the Opening of Islamic Windows

in Banks

- The Law for Merging the Iraqi Bank with Rafidain Bank

- The Law for Ratifying the Arab Convention on Combating Money Laundering

- The Law for Ratifying the Convention on Regulating the Provisions of Electronic

Signatures and Electronic Transactions

- Retaining the Centre for Banking Studies

The Finance Committee will work to hold a conference to release this report, and then

hold intensive workshops that bring together stakeholders, experts, and professionals to

reexamine the banking laws. The Committee will then work to amend the laws that

contradict or conflict with the banking laws, and that impede investment movement or

attracting investors. These laws include the corporate and securities laws and the

investment law. The amendments shall be carried out in a manner that achieves

integration between the laws and the systems that regulate economic matters in the

country.

47 47

Recommendations:

1. Creating a legislative banking environment that allows for the development of the

banking system in a manner that corresponds with the current and future

developments, and that serves the process of development and economic activity.

2. Forming a high commission for bank reform in Iraq that includes the Cabinet’s

Economic Committee, the Iraqi Central Bank, and the Council of Representative’s

Finance Committee and Economic Committee, as well as a group of experts,

economists, and bankers. This commission shall be responsible for building a

strategy for the Iraqi banking sector to contribute in economic development, as

well as for setting the policies and mechanisms for transitioning to the stage of

banking sector reform – both the state-owned and private sectors. A period of 5

years, ending in 2017, shall be set for the accomplishment of this task through

successive stages, with a five-year development plan.

3. Forming a commission for bank supervision and oversight to oversee banking and

financial institutions. This commission shall be attached to the Council of

Representatives.

4. Reexamining amending the laws related to monetary policies, such as the law for

corporations, securities, and investment.

5. Establishing a company to guarantee the deposits in private banks, as well as

establishing a company to guarantee credit. This is in addition to setting up a

central fund for financing private banks to cover funding for development projects

according to the terms and permissions particular to participation among the state-

owned and private banks.

6. Legislating a law for Islamic banking, as the current Banking Law No. 94 from

2004 did not mention Islamic banking at all. As a result, Islamic banking is

constrained by the oversight regulations imposed on traditional banking.

7. Giving Islamic banks the right to own moveable and immovable assets, invest

them, sell them, and lease them. This includes reclaiming owned and leased lands,

and preparing them for agriculture, industry, tourism, and housing. This also

includes the founding of companies and shares in projects under construction in

fields that are compatible with Islamic Sharia.

8. Encouraging banks to open additional branches and banking offices in all of the

Iraqi provinces to increase the rates of banking density.

9. Creating a future plan to achieve mergers between private sector banks to create

large banking blocs that can occupy an important space in domestic banking

work.

10. Amending the current banking laws in a manner that ensures the use of legal

definitions and phrases in clear legal language.

48 48

11. Amending the text of the Banking Law No. 94 from 2004 in accordance with the

nature of banking activity, and determining the articles that prevented the banks

from engaging in investment activity, which is one of the essential aspects of their

work.

12. Encouraging banks to establish shared funds to finance investment, real estate,

industrial, agricultural, or service projects.

13. Activating the role of the specialized state-owned banks (industrial, agricultural,

and real estate) and transferring their tasks from the comprehensive banks to these

specialized banks, according to the goals for which these banks were established,

and to speed the process of development.

14. Activating the work of the private banks to employ their large amount of financial

liquidity to provide credit and increase their contribution to the development of

economic sectors and private projects that suffer from a decrease in their level of

capital.

15. Increasing the private sector banks’ amounts of letters of credit, and permitting

them to accept government deposits and securities drawn by government circles.

16. Restructuring the Office of the Inspector General in the Central Bank, and

attaching it to the commission for bank supervision and oversight.

17. Introducing modern elements to banking, such as the comprehensive system and

credit cards, and modernising banking in accordance with global technological

progress, as well as linking the banks in one network, which will facilitate

withdrawal and deposit operations.

18. Easing the procedures for opening foreign bank branches and removing the

complications in government offices.

19. Activating the role of the Union and Association of Iraqi Banks.

20. Diversifying and developing the products and services of the banking sector and

creating new products that meet all clients’ needs in both the individual and

institutional sectors.

21. Strengthening the concept of quality management and integrating it into banking

operations by designing, implementing, and continuously developing business

quality management systems according to international standards.

22. Building a broad base of qualified and trained leaders capable of managing banks

in manners that ensure their growth, development, and adaptation to changes and

developments in the modern banking industry.

23. Developing banking training centres that work to improve banking capabilities in

Iraq and produce research and studies. All banks may benefit from these centres,

using them to build the capabilities of their employees or of those who wish to

work in banks, whether in the public or private sector.

24. Implementing best practices and international standards to achieve more

integration within the economy and to achieve reform on all levels by

49 49

implementing Basel I, II, and III, and working to create legislation for their

implementation.

These are the foundations and the steps that we recommend be adopted without delay.

After these foundations have been laid, the next phase will deal in greater detail with the

reforms necessary to establish a sound banking system that supports and contributes to

economic development.

50 50

Sources:

1. The Iraqi Institute for Economic Reform – Public Bank Reform, the Reality and

the Horizon

2. The 2012 Yearly Statistical Bulletin – The Iraqi Central Bank/ The General

Directorate of Statistics and Research

3. The 2012 Yearly Economic Report – The Iraqi Central Bank/ The General

Directorate for Statistics and Research

4. Walid Aiydi – Study on the Iraqi Banking Sector Between Reality and Aspiration

5. The World Bank’s Comprehensive Report on the Financial Situation in Iraq in

2011.

6. Walid Aiydi – The Iraqi Central Bank and the Development of its Monetary

Policy and Bank Oversight

7. Professor Thuraiya Al-Khazarji- Monetary Policy in Iraq Between the Legacy of

the Past and the Challenges of the Future

8. Dr. Sinan Al-Shabibi – The Characteristics of Monetary Policy in Iraq

9. The Iraqi Institute for Economic Reform- Evaluation of Bank Reform Policy in

Iraq

10. Waad Al-Mashadani – Financial and Banking Reform in Iraq

11. Hisham Abdul Jabbar – Paper presented to the first Iraqi Banking Conference,

organized by the Association of Private Banks in September 2013

12. Mustafa Matloub – Obstacles to the Work of Islamic Banks and Ways to Treat

Them and Develop Them

13. The Conference on Banking Regulation and Supervision in Amman in March

2013.

14. A research paper by David Green, Prerequisites for Sound Financial Supervision

in Iraq presented during the Amman conference.

- Iraqi Central Bank Law No. 56 from 2004

- Banking Law No. 94 from 2004

51 51

The Finance Committee in the Iraqi Council of

Representatives

Phone Number: (009647801977516)

Email Address: (Financia7@gmail.com)