Lower interest rates expected
Iraq’s central bank grants license to Riyada Bank for SME financing
BAGHDAD — The Central Bank of Iraq has issued a license for the establishment of Riyada Bank, a new institution dedicated to providing financing and support for small and medium-sized enterprises (SMEs) through competitive interest rates.
This move aims to consolidate SME financing in Iraq under one specialized bank, rather than dispersing it through various government- and privately-owned banks. Iraq’s benchmark interest rate currently stands at 7.5%.
“Riyada Bank is one of the strategic banks initiated by the Central Bank last year,” said Ammar Hamad, deputy head of the central bank. “Following extensive discussions with relevant entities, we granted a license for its establishment this month.”
Hamad explained that Riyada Bank will cater specifically to SMEs, offering financing options with competitive interest rates compared to traditional banks. The central bank plans to gradually shift its existing SME initiatives, currently managed by various lenders, to be handled exclusively by Riyada Bank.
Central Bank Governor Ali Al-Alaq has previously highlighted efforts aimed at strengthening the Iraqi economy and private sector through “new projects aligned with the government’s direction and the Prime Minister’s focus on supporting youth and small and medium-sized enterprises.”
Al-Alaq further highlighted the central bank’s role in facilitating the transition of financing by transferring existing loan programs for small projects, launched in 2015, to Riyada Bank. The move is expected to provide the new institution with a solid foundation and access to central bank funds.