1. NOWROZ –University Duhok
“FINANCIAL INCLUSION”
21-22/April / 2018
NOWROZ –University Duhok
Iraqi Private Banks League
IPBL

2. Snapshot of the Iraqi Banking Sector
The Iraqi banking sector has been growing steadily during the past 5 years
Metric
2012
2016
% Growth
Total Capital
4.9 billion
9.7 billion
98%
Total Assets
200 billion
221 billion
11%
Deposits
20 billion
51 billion
154%
Capital and Reserves
9 billion
12 billion
33%
Number of Banks 54 72
Number of Branches
972
1,068
10%

3. Recent Developments in the Iraqi Banking Sector
The IPBL is working together with the CBI to draft and implement new regulations to take the sector forward; the IPBL has a seat on the board of the CBI.
Compliance
Risk Management
Corporate Governance
Infrastructure & Reconstruction
Liquidity & Credit
The Central Bank of Iraq (CBI) issued a globally compliant AML Law in &
(CAMEL) Evaluation criteria &
IFRS reporting standards
The CBI issued new instructions on risk management in 2016 and is working towards the objective to have all Iraqi banks compliant to the latest guidelines of the BASEL II.
The CBI issued a manual with principles on corporate governance for banks in 2016, which it has required all banks to comply with
The private banks are getting ready to be involved in major projects related to reconstruction of post-war infrastructure, most of which are expected to come online in 2018
Several initiatives are underway to increase availability and accessibility of credit and liquidity to Iraqi public, with a focus on private businesses and financing SMEs to drive a surge in the economy

4. Reasons to be Optimistic about the Future
Cleared out “ISIS” and Improving security situation, healthier fiscal policy and sounder regulatory environment are among the factors that lead us to be optimistic about the future of the banking sector in Iraq
There is significant investment potential in the reconstruction of damaged areas.
There is significant focus on increasing financial inclusion.
Leading international professional services firms (such as E&Y, KPMG, PWC) are increasingly active in Iraq.
Significant focus on developing the Iraqi economy by the Regional & International Organization.

5. financial inclusion
The World Bank revealed the achievement of Iraq rates of financial inclusion by 11%, noting that the Arab rate of up to 27 %
All government employees salaries to be paid through Banking Accounts .
CBI initiative to grant a loan of $ 5 billion "6.5 trillion dinars" to strengthen the strategy of financial inclusion Through financing SME’s.
Regional Initiative to Enhance Financial Inclusion of Arab Countries to Reduce Poverty and Achieve Economic Growth sponsored by AMF.

6. The Challenges Ahead Need to establish deposit guarantee Fund ASAP
IPBL is working closely with CBI & PM office to address these challenges.
difficulty in establishing correspondent banking relationships.
Need to establish deposit guarantee Fund ASAP
*Unfair competition with state banks
*Reopening the branches inside the damaged Governorates
Adopting Governance culture is one of the beg challenges
Training on the international experience and knowhow
How to adopt latest technology to local culture?
Banking Correspondence
Public
Trust
Competition
with State Banks
Rebuilding Damaged Branches
Governance
Human
Resources
Information Technology

7. Financing SME - Operating Agreement: Invest-Fund and Shareholder Banks
Funds Distribution
Facility Operation
Records and Reporting
Loan or Grants Conversion
Distribution
Reallocations
Dinar-Base
SME loans exclusively
A. Allocations
■ Conditions
- SME loans
- Pay fees
- Compliance
■ Notifications Increase
B. Loans
■ Eligibility.
■ Categories.
■ Funding %.
■ Pricing Framework.
■ No Credit Exposure.
SME loan Account
Transactions Entries
Reporting;
- Movement
- Nature of loan
- Loan Total
Training
Loan Performance
Assessment
Scoring Method
Grant Conversion to
Shares Entitlement
Shareholder Capital
Contribution 2 7

8. Financing SME - : Flow of Funds
Invest-Fund Resets quarterly allocations
Allocations are ICF-SME assets
Collects 4% p.a. fee on allocations ID $
BANK ( $ to ID)
ID Liabilities
Owed ICF-SME
SME Borrower
BANK
SME
Revolving
Loan Account ID
Repayment ID
ID Capital Contributions and Periodic Fee Payments
All cash extended to banks are bank liabilities repayable back to the
Invest-Fund 3 8

9. Thank you