After years of bank collapse, Iraq is launching a company to guarantee depositors ’money

Al-Jazeera Net - Baghdad

Announced in Baghdad last week the establishment of the Iraqi company to guarantee deposits after years of the collapse of some private banks and stand in the way of developing the banking sector, which has a number of dealers with 22% of adults after the project to localize the salaries of state employees.

Several banks collapsed, especially in Iraq in the years that followed the year 2003, such as Al-Warka, Basra, Dar es Salaam, the Economy, and others. Until now, depositors demand their money after bankruptcy of banks through demonstrations that they organize periodically in front of the buildings of financial institutions such as the central bank.

The capital of the Iraqi company to guarantee deposits is 100 billion dinars, "83.3 million dollars", and 42 private, governmental and foreign banks operating in Iraq contribute to it, in addition to the National Insurance Company and the state employees' pension fund.

Walid Idi, adviser to the governor of the Central Bank of Iraq, told Al-Jazeera Net that the company aims to enhance citizen's confidence in the banking sector.

The Iraqi state launched two projects, the first of which is the localization of the salaries of state employees, retirees and social welfare, who number 7 million people, and the second is the deployment of electronic payment tools throughout the country, to increase the number of customers with the banking sector.

Protection of the banking system
Idi stressed that all participating banks will inform their customers that their deposits are insured with a company to guarantee deposits, noting that the establishment of this company came in accordance with international standards and therefore will make its way towards leadership.

He also explained that this company will protect the banking system, maintain depositors ’money and increase the banking culture, as the monthly insurance amounts to one dinar for every 10,000 dinars," $ 8.3 dollars ".

He pointed out that the company has the right to invest its money by depositing it in banks as fixed deposits and buying governmental and other securities.

According to the Law of the Iraqi Company for the Guarantee of Deposits, it does not supervise the cash deposits for the value of credit facilities, bank deposits with the central bank, the legal reserve for banks, deposits of members of the board of the contributing bank, and bank deposits deposited with another bank.

For his part, the executive director of the Iraqi Private Banking Association, Ali Tariq, said that the Iraqi Deposit Guarantee Company is a joint stock company and provides cover to ensure public deposits with banks operating inside Iraq only.

He pointed out that the company will establish two funds, the first is for investment and the other is for the contribution of Islamic banks, and that the immediate compensation will be a maximum of 150 million dinars for each depositor that the central bank decides to liquidate.

He pointed out that the establishment of this company will contribute to withdrawing chunky money in homes and entering it into the banking system, which will contribute to the development of the Iraqi economy.

According to Article 13 of the Banking Deposits Company Law, the amounts less than one hundred million dinars, the compensation rate will be 51%, while the amounts that are more than one hundred million dinars, the compensation rate will be 25%.

Loss of previous deposits
On the other hand, citizen Mohammed Al-Barzanji - who deposited approximately $ 40,000 in Al-Warka Bank before his bankruptcy - wondered about the fate of his money now after the company was established.

In his speech to Al-Jazeera Net, Al-Barzanji said that he called the Central Bank and the competent authorities since 2012 until now to return his money that he deposited in Al-Warka Bank, but to no avail, indicating that the answer that came after the establishment of the new company is concerned with current deposits and not deposits before its establishment.

He emphasized that our money was stolen by daylight and in front of the central bank and has not done anything so far, especially as the bank has removed from it the guardianship imposed by the central bank.

For his part, the economist Bassem Jamil Antoine said in his interview with Al Jazeera Net that the establishment of the deposit guarantee company will increase dealing with Iraqi private banks.

He stressed that the Iraqi state is required to find a quick solution to the owners of deposits in bankruptcy banks, because these have greatly affected the reputation of the banking sector, because of their lost right and the lack of state intervention to return it from those who stole it, stating that the lack of establishment of this company made government banks dominate the banking sector, Because government banks are safer for Iraqis.