Payment Systems

Iraq owns one of the most advanced electronic payment systems in the world. The system is designed to ensure the exchange of payment orders between banks automatically via an efficient and secure network.

The Central Bank of Iraq (CBI) operates and manages the settlement accounts of the participants to ensure the safety and efficiency of payment systems and clearing operations.

The payment network consists of the following systems:

  • RTGS: Real Time Gross Settlement System
  • C-ACH: Cheque - Automated Clearing House
  • GSRS: Government Securities Registration System

The CBI aims to reduce the use of cash in the country despite the challenges of geography and the remaining security issues which make the transfer of money across the country difficult and risky. Hence the objective is to automate the settlement of checks, salaries and the activation of automation systems for electronic cards, in order to keep more liquidity in bank accounts.

The other achievement is the automation of the primary market for the government securities system which the CBI began to work on with the consultation with the Ministry of Finance (MOF) in 2008. There are also a plans to automate the activities of the secondary market.

The legal framework of payment and settlement systems

The overall aim of the CBI with the support of its laws is to maintain domestic price stability and promote a competitive & stable financial system. The legal framework for the banks and the CBI is stated in the Banking Law and the Central Bank of Iraq Law which were issued on September 19th, 2003 and March 6th, 2004 respectively. The objective of the CBI in issuing these laws was to set up an Iraqi legal framework for banking in line with international banking standards, promote confidence in the economy by establishing a safe financial environment, and provide a competitive and accessible banking system. 

It should be noted that the laws of payment systems are currently under study by the CBI in order to assess the experiences of other countries and its applications in the working environment for a country like Iraq. Based on the 2004 CBI law, these electonic activities have been agreed between participants and the CBI through contracts which include guarantees, legal rights, and protections for all parties.

The CBI is also working with local and foreign entities to issue special laws for all electronic payments so that these actitivies operate under a proper legal environment.

The Securities Law was legislated and published in April 2004. It highlights the need to legislate more developed laws to cover the activities of the private sector in the securities market as well as on the organization of primary and secondary markets for government securities.

IPS Components

1. Real Time Gross Settlement system - RTGS

  • The system was activated on the 24-AUG-2006. The system connects the CBI with the main bank branches, and the Ministry of Finance (MOF) for exchanging high valued transactions inside Iraq.
  • This system replaced the manual execution for operations and eliminated settlement risks between banks.
  • CBI is the owner of the system, and takes on the responsibility to install the required software for the participant banks, in additon to providing training courses for users. On the administration side for the CBI, important processes such as the monitoring of banks are now made easier.
  • At beginning five banks participated in settlement processes, but gradually the CBI widened the system to cover all banks and foreign branches that have a license in Iraq.
  • The system has safety features (i.e. the 4 four eyes principle), and the authorization required to activate the system can only be provided by CBI.

2. Cheque - Automated Clearing House - C-ACH

  • The system enables the participants banks and their branches to exchange payment orders automatically. The final settlement is processed and sent to the Real Time Gross Settlement System (RTGS). Within this system the encoded cheques are exchanged and the original copies of the cheques are kept at the deposited branch, then the electonic version of the cheque's data is sent through the branch to the head office system.
  • The system was activated on the 14-SEP-2006 for the main bank branches (Rafidain Bank, Rasheed Bank, Bank of Baghdad, Commercial Bank, Middle East Bank). The number of participants has increased since then, there are now more than 19 banks in addition to the CBI branches.
  • CBI branches employee (in Basra, Erbil, Mosul, and Sulaimaniya) have been trained to install the system for bank's branches to facilitate the transaction processes within Iraq.
  • The Electronic Clearing Cheque System is part of Automated Clearing House System. Its execution started with the Bank of Baghdad, the Middle East Bank, the Credit Bank, Dar El Salam Bank, the Commercial Bank, and the Trade Bank of Iraq. There are now 17 participant banks.
  • It has been agreed with participant banks to also take on some of the responsability of their own training and be prepared for further testing environments.
  • Training of Iraqi and foreign banks branches will be provided until full participation is achieved.

3. Government Securities Registration system - GSRS

  • The system manages the government securities issued by CBI and Ministry of Finance (MOF). Through this system the CBI has a greater control over liquidity. The system was activated in November 2008.
  • The system manages the process of auctions for the issuance of government securities – Primary Markets.
  • The system keeps the main recordes, including interest payments and repayment of the debts.
  • The system handles the settlement of processes of government financial securities between the market and participating banks – Secondary Market.
  • Saving and archiving processes.
  • GSRS system connects with RTGS for completing the financial settlement operation on participant accounts in RTGS.
  • The GSRS relates with C-ACH for presenting information on the status of collateral at the begining of each session.

Names of bank participants in IPS

Bank name
RTGS
C-ACH
GSRS
ACH
CEP
Abu Dhabi Islamic bank
X



Agricultural cooperation bank
X
X

X
Al-Bilad Islamic bank for investment and finance
X



AlHuda bank
X


X
Ashur international bank for investment
X
X
X
X
Babylon bank
X



Bank Melli Iran
X



Bank of Baghdad
X
X
X
X
Bank of Beirut and Arab countries
X



Bank of Erbil
X



Basrah international bank for investment
X



Byblos bank
X


X
Cihan bank for Islamic investment and finance
X



Commercial bank of Iraq
X
X
X
X
Credit Bank of Iraq
X
X
X
X
Dar Essalaam investment bank
X
X
X
X
Dijlah and furat bank for development and investment
X



Economy bank for investment and finance
X


X
Elaf Islamic bank
X
X
X

Emerald bank
X



Gulf commercial bank
X
X
X
X
Industrial bank of Iraq
X


X
Intercontinental bank of Lebanon
X


X
Investment bank of Iraq
X
X

X
Iraq bank
X



Iraqi Islamic bank for investment and development
X



Iraqi middle east bank for investment
X
X
X
X
Islamic regional cooperation bank for development and investment
X


X
Kurdistan international bank for investment and development
X
X
X

Mansour bank for investment
X


X
Mosul bank for development and investment
X
X
X
X
National bank of Iraq
X
X
X
X
National Islamic bank
X


X
North bank for finance and investment
X



Rafidain bank
X
X

X
Rasheed bank
X
X

X
Real-estate bank
X


X
Sumer commercial bank
X



Trade bank of Iraq
X
X
X
X
Trans Iraq bank
X


X
Turkey agricultural bank
X



Union bank of Iraq
X



United bank for investment
X
X
X
X
Warka bank
X