Banks Refuse to Ante Up amid Liquidity Shortage

The person who bought her house is now demanding eviction in less than a month, while she is unable to pay for the new house because the bank limits withdrawals to $2,000 per week and sometimes only allows withdrawals every two weeks.

Many Iraqi citizens have with similar stories. During the aforementioned visit to the unnamed bank, Al-Monitor saw people shouting among themselves and fistfights broke out between the bank’s staff and the customers. An official at the bank said they had a rescue plan and had offered customers cars and real estate in place of their money.

Umm Ahmad said such offers gave her hope that she would see at least some return of her savings, even if not in cash, so she decided to buy a house. She and other interested customers were given a list of addresses for the houses they could purchase with deposited funds, yet they were shocked after those living in the homes threatened to kill the customers should they buy their houses.

Umm Ahmad said it became clear that all of the listed properties were mortgaged to the bank and the owners had failed to pay the interest on their loans.

On March 19, Ihsan al-Yasiri, the director of issuance and reserves at the Central Bank, made press statements aimed at reassuring customers of national banks, explaining that the Central Bank can ensure the money through the legal reserves available at each bank.

Speaking to Al-Monitor, banking expert Inas Mohammed said that the government is responsible for a huge chunk of what the private banking sector is going through.

“The liquidity problem in private banks is linked to investment transactions and projects with the government. For example, the Ministry of Education owes one of the banks that are currently suffering from liquidity issues 100 billion dinars in dues, and the ministry has only paid back 8 billion dinars in a payment last week,” she said.

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