The Central Bank of Iraq has announced that it will soon launch Riyada Bank, a new specialized bank dedicated to financing and supporting small and medium-sized enterprises (SMEs) in Iraq. The launch will proceed after the completion of the necessary establishment procedures.
Key Highlights
The new bank is designed to address key challenges in the SME financing landscape:
- New Specialized Bank: The launch of Riyada Bank, which will specialize in financing SMEs.
- Centralized Management: The bank will manage all initiatives related to financing these projects.
- Collateral Support: It will offer support to startups that lack sufficient assets to provide as collateral for financing.
- Risk Mitigation: The model builds on previous initiatives that reduced default risks through partnerships with local financial institutions.
A Specialized Bank to Manage SME Financing
According to the director of Financial Inclusion at the Central Bank of Iraq, Riyada Bank will be a dedicated institution for financing small and medium-sized projects. It will also manage all government initiatives related to this vital sector, centralizing efforts to support SME growth.
Addressing the Challenge of Collateral for Startups
A key feature of Riyada Bank will be its focus on supporting startups that do not have sufficient assets to provide as collateral for loans. This approach aims to ease access to credit for young businesses, a significant barrier to entry for many entrepreneurs. This model could serve as a blueprint for future SME-focused banks in the country.
Building on a Foundation of Risk Mitigation
The director also noted that previous SME financing initiatives in Iraq have achieved positive results. These programs successfully created mechanisms to reduce the risk of project defaults on loan repayments by building partnerships with local financial institutions, such as the Iraqi Company for Bank Guarantees. Riyada Bank will likely utilize similar strategies to ensure sustainable lending practices.
Source: WAYA
