The Central Bank of Iraq launches a comprehensive reform project to modernize the private banking sector.
The Central Bank of Iraq launches a comprehensive reform project to modernize the private banking sector.
2025-04-07 01:50
Shafaq News/ The Central Bank of Iraq announced on Monday reform plans aimed at modernizing the Iraqi private banking sector and building a robust, modern, and flexible banking sector that will drive economic growth and enhance financial inclusion .
The bank stated in a statement received by Shafaq News Agency, “This plan is the result of joint efforts between the Central Bank of Iraq, the government, and the private banking sector, in cooperation with Oliver Wyman Consulting.” It indicated that “its success depends on the active participation and cooperation of all concerned parties, as the Central Bank of Iraq and the government will lead projects aimed at modernizing the sector and meeting the evolving needs of a rapidly growing economy.”
According to the statement, these projects focus on three objectives: enhancing and deepening financial inclusion in Iraq, raising the efficiency and productivity of the private banking sector, and creating a fair and healthy competitive environment in the market, while enhancing the sector’s flexibility and resilience to risks .
The statement added, “This project contributes to enhancing the protection of depositors and creditors, along with financial education campaigns to restore confidence in dealing with banks. The base of financial inclusion will also be expanded by establishing legal and regulatory frameworks and implementing them effectively. With the aim of enhancing access to services, payment systems will be updated to conduct efficient and reliable transactions for both companies and individuals. In addition, the financial infrastructure will be expanded, including increasing the network of branches and ATMs. Compliance procedures for anti-money laundering and countering the financing of terrorism measures will also be simplified and assessed through the digital identity system.”
The statement explained: “A key condition for the success of the plans is requiring all banks to comply with a set of standards and actively participate in the sector’s transformation process. Banks must move toward business models that add value to the Iraqi economy, while providing distinguished services to customers, ensuring their financial stability, and combating fraud and financial crime.”
According to the statement, the main banking standards to be applied to four main categories are divided into ownership structure and governance by setting a maximum ownership limit to prevent excessive control (concentration) by any single entity or related parties, ensuring the existence of competent and independent boards of directors, applying suitability tests (qualification) for all key leadership positions, in addition to conducting intensive due diligence processes on all major shareholders .
He pointed out that “the second criterion is the sustainability of the business model, which is also achieved by obligating banks to adopt sustainable and viable business models by submitting detailed, compatible business plans, strategic plans, financial forecasts, organizational structure, technology implementation plans, and operations management, and ensuring that key services and products are aligned with market needs to support the Iraqi economy and citizens. The third criterion can be found in financial metrics, which is maintaining capital adequacy and liquidity ratios in line with global best practices to ensure banks’ ability to withstand financial crises.”
The statement noted that the fourth standard focuses on risks and regulatory compliance, by keeping pace with global best practices in the field of compliance, including comprehensive measures to combat money laundering and terrorist financing, ensuring the sector’s protection from financial crimes, and enhancing transparency in reporting and auditing by accredited auditors to reduce conflicts of interest, including transactions with related parties .
The statement continued: “The reform process will be a multi-stage journey, during which private banks will be assessed for their compliance with the required standards at various stages of the reform process. The first assessment cycle is expected to begin in the first quarter of 2026.”
At the conclusion of the statement, the Central Bank affirmed that “the coming months will witness the Central Bank of Iraq sharing with the private banking sector detailed criteria and timetables, based on official circulars, for implementing the reform process. It will work to activate support channels and hold workshops to provide technical assistance to ensure their readiness before the start of the evaluation process. All licensed private banks will be asked to officially confirm their participation in the reform process. The Central Bank of Iraq is fully committed to achieving this transformation by working closely with all relevant parties to pave the way for a strong and comprehensive financial system.”
In this context, Prime Minister Mohammed Shia al-Sudani inaugurated the Iraqi Banking Sector Reform Conference today, Monday .
shafaq.com
