Iraq’s Central Bank Introduces Exempted Credit Access and Grant Programs

Promoting Financial Stability and Economic Growth in Iraq

Baghdad, Iraq - The Central Bank of Iraq (CBI) has announced the establishment of exempted credit access and grant programs for banks operating in the country. As part of its efforts to promote financial stability and economic growth, the CBI has introduced new regulations governing the licensing of foreign-owned banks and branches.

New Regulations for Foreign-Owned Banks

Under the new rules, foreign banks seeking to establish a presence in Iraq will be required to obtain a banking license from the CBI. The license will be granted for an indefinite period and will specify the terms and conditions under which it was issued. Compliance with these conditions is a continuing requirement for all license holders.

• Key highlights:
  • Foreign banks must obtain a banking license from the CBI
  • License is granted for an indefinite period
  • Terms and conditions of the license are specified by the CBI

Limitations on Foreign Ownership of Domestic Banks

The CBI has also introduced limits on the number of licenses that can be held by foreign-owned banks, capping the total at six banks until December 31, 2008. After this date, there will be no limit to the number of licenses issued.

• Key highlights:
  • Foreign ownership of domestic banks is capped at six banks until 2008
  • No limit on foreign ownership after 2008

Clarification on Foreign Ownership Rules

In addition, the CBI has clarified its rules regarding foreign ownership of domestic banks. Foreigners can own up to 50% of a domestic bank without counting towards the six-license limit. However, any foreign-owned bank must be subject to consolidated supervision by a supervisory authority in another country.

• Key highlights:
  • Foreigners can own up to 50% of a domestic bank
  • Foreign-owned banks must be subject to consolidated supervision

Application Process for Banking License

The application process for a banking license is also governed by new regulations. Applicants will be required to provide detailed information and documents, including financial statements and business plans. The CBI has also introduced requirements for the disclosure of certain information by administrators and owners of qualifying holdings.

• Key highlights:
  • Applicants must provide detailed information and documents
  • Disclosure requirements for administrators and owners

Commitment to Promoting Financial Stability and Economic Growth

Commenting on the new regulations, a spokesperson for the CBI said: “We are committed to promoting financial stability and economic growth in Iraq. These new regulations will help to ensure that foreign-owned banks operating in the country meet high standards of governance and supervision.”

Exempted Credit Access and Grant Programs for SMEs

The exempted credit access and grant programs are designed to support small and medium-ized enterprises (SMEs) in Iraq, which have been identified as a key driver of economic growth in the country. The programs will provide access to credit and grants for SMEs that meet certain criteria, including having a good track record of financial management and being engaged in productive activities.

• Key highlights:
  • Programs designed to support SMEs
  • Eligible SMEs must have a good track record of financial management and be engaged in productive activities

Launch of Programs Expected Later This Year

The CBI has invited banks operating in Iraq to apply for the exempted credit access and grant programs, which are expected to be launched later this year. The programs are part of the CBI’s efforts to promote economic development and job creation in Iraq.

• Key highlights:
  • Applications open for exempted credit access and grant programs
  • Programs expected to launch later this year