Iraqi Rafidain Bank adopts diminishing interest policy per PM's directives

Shafaq News / The management of the government-owned Rafidain Bank decided, on Tuesday, to adopt the "diminishing" bank interest on loans and advances starting from the current year, in implementation of the directives of Prime Minister Mohammed Shia Al-Sudani, after deputies and sources informed our agency that government banks were not complying with these directives.

The administration stated, "The Rafidain Bank confirms the adoption of the diminishing interest approach on loans for individuals and all institutions since the beginning of 2024."

"Instead of the fixed interest approach previously used, the interest will be diminishing, in a measure aimed at ensuring the provision of the best services to all segments of society."

Earlier today, member of the Parliamentary Finance Committee Muayyin Al-Kadhimi confirmed that "government banks were not complying with the directives of PM Al-Sudani regarding the interest rates of loans."

Al-Kadhimi told Shafaq News Agency, "A lot of the loans and advances in banks belong to the private sector, and they are not necessarily bank funds, so there is no consideration for reducing interest rates."

"If the ordinary employee wants to take a loan of 10 million dinars from the banks, he end up paying 14 million with the interest rate."

Al-Kadhimi explained that "the Parliamentary Finance Committee will host the Central Bank (CBI) Governor and bank managers in the coming period to discuss the mechanism of granting loans and advances to employees and citizens," noting "the banks' non-compliance with the Prime Minister's directive that interest rates should be diminishing rather than fixed."

On March 26th, a source told Shafaq News Agency that most government banks are still adopting the fixed interest approach on loans and advances despite the directives of Prime Minister Mohammed Al-Sudani to recalculate banking interests.