Eleven Iraqi banks agree to launch a specialized company to finance special projects

About this project, applied for the first time in Iraq, the banking expert, Izz al-Din Muhammad Abid, said: this Company is complementary to the Iraqi Company for Banking Guarantees which was established a short while ago with a total capital of three and a half million dollars. It aims at enhancing the obtainment of small, medium-sized and minor enterprises in Iraq on loans from private banks, in addition to supporting the use of modern practices of credit and international banking standards in granting loans to small and medium-sized enterprises. All of this is to support the continuing economic growth in Iraq, and especially the support and development of the private sector. Giving small and medium-sized enterprises this importance stems from the fact that they share the spirit of individual initiative; that is, starting a project by an individual to improve his standard of living. It should also be noted that these projects constitute a significant proportion of economic activity for many countries in the world, whether they were developing or developed; they also constitute a high proportion of enterprises that widely contribute in developing the economies of these countries, especially the developed ones. Such projects, generate self-employment and jobs and participate in helping the important groups in the labor market, as well as having several important advantages like: working with simple, low-cost and local materials within a limited area, as well as working with primary skills and techniques; in addition to the possibility of easily adapting to the new circumstances in the market and the rapid response to its needs. Finally, they contribute in the rehabilitation or changing infrastructures and equipment; such as inventing agriculture and construction tools or producing essential services commodities in times of crisis. In response to a question concerning the establishment of this Company to study the conditions of projects in Iraq, and the possibility of exposure to profit or loss, Izz al-Din, explained that in spite of facing small and medium-sized enterprises for numerous problems and challenges, especially in times of unstable security, but, and as much as it concerns the banking system, the main problem facing them is cash funding for the establishment and support of these projects. Thus, the foundation of the Iraqi Company for Banking Guarantees, in the time being, forms the mainstay of such projects, in order to assist them in obtaining loans from Iraqi private banks to participate in the capital of the Company, in addition to helping those banks through the utilizing the amount of the guarantee for the development of managing loans and their risks. The Company is owned by (11) Iraqi banks supported by the Iraq Central Bank due to its important part in deepening the role of the Iraqi market. The guarantee amounts differ according to the type of risks associated with them; they could reach 75% of the value of the original loan, which ranges from $ 5000 to $ 25000. The company's operations are based on developing institutions and building the financial capacity of banks and the Company itself when marketing and the applying the program of loans guarantee. The Company's activity will cover all of Iraq by the network branches of the banks involved in such comprehensive coverage. It will assist small and medium-sized enterprises to enter the world of credit in all Iraqi provinces. The Company will provide loans with a high level of quality for the productive, service, agricultural and commercial projects throughout guaranteeing the banking loans offered by the participating banks. Accordingly, we can say that the company achieved a step or steps forward on the way of developing and modernizing the Iraqi banking system.(Source)Al-Sharq Al-Awsat