Financial deposits have increased at Iraqi government and private banks, which Iraqi experts and banking specialists say reflects growing public confidence in the country's banking institutions.
The volume of cash deposits has grown this year to about 70 trillion Iraqi dinars ($60 billion), Private Banks Association executive director Abdul Aziz al-Hasoon told Mawtani.
Of this, 40 trillion ($34 billion) belongs to the public sector, held by national banks and financial institutions, and 30 trillion ($26 billion) is private money deposited at government and private banks, he said.
Attracting deposits is the basic function of the banks, he said, as they collect savings and surplus money and work on managing and investing it in public profitable projects.
"With the growth of the volume of currency flowing into circulation inside the country in recent years as a result of the increased economic and developmental activity, individuals and companies, as well as the government, are depositing money on a greater scale," he said.
"Fixed deposits, which mostly come from the private sector, represent the more important financial deposits because this is money that is not subject to withdrawal in the short term," he said.
This "gives the banks considerable leeway to use it by investing it in the market in a comfortable, flexible way, which is unlike the temporary deposits", he added.
Increasing deposits, and the best investment of these funds, lies in financing projects in areas such as housing, education and health, which would ultimately enhance the national development efforts and boost the economy, he said.
Improving customer experience
Al-Hasoon said there is a need to "develop banking services, particularly depositing, withdrawal, guarantees and financial transfers, and the use of modern systems to complete these functions".
This would "help in reinforcing the depositors' inclinations to use our banking facilities", he said.
The increase in the volume of deposits indicates a "growing confidence by individuals and companies in the Iraqi banks and financial institutions", said economic expert Bassim Jameel Antoine.
"The increased activity of depositing means the Iraqi banking institutions have come to enjoy further trust on the part of depositors," he told Mawtani.
But any increase in the amounts of money deposited will not be useful unless steps are taken to benefit from it by starting investment projects, and operating them in a proper way, so the banks will not become merely safe storage for the depositors' savings, he said.
It also is important to encourage the extension of loans to businessmen and investors, and to make banking facilities available to ensure this capital will be invested in service of Iraq's reconstruction process, he said, in addition to meeting the public's need for general services.
Efforts to improve the performance of Iraq's government and private banks also must be intensified, he said, to make them more capable of adapting to the market economy.
This would create a legal environment that is capital-attractive and based on speed, integrity and transparency in getting daily transactions completed, he added.
Modernising Iraq's banks
Reforming the banking systems and current operating procedures is one of the important steps needed to improve the functioning of Iraqi banks, said MP Abdul Hussein al-Yassery, who serves on the parliamentary finance committee.
Many of those systems are "old, fail to keep pace with the progress, and have too much red tape, especially in the areas of deposits and loans", he told Mawtani.
Al-Yassery also called for easing the conditions for collaterals and reducing interest rates on deposits and loans.
"There is an urgent need for new legislation that serves the banking sector, which would protect the depositors and the lenders and motivate the banks to invest their deposits in projects of rebuilding and reconstruction, easily and without administrative complications," he said.
The banking institutions can play a robust developmental role in this respect, he said.