Central Bank proposes two options for reform [Archives:2004/767/Business & Economy]

Mahyoub Al-Kamaly
The Central Bank of Yemen is pondering on assessing conditions of Yemeni banks for reforming them in a manner commensurate to the speedy development in the world of finance and economic globalization. In addition, to be able to compete, the Central Bank seeks to reconsider paid capitals of those banks.
The Mayor of the Central bank Ahmed al-Samawi had affirmed, at the conclusion of an activity related to the programs of communication and the art of dealing with clients and the rules of banking marketing, that the Yemeni banks had two options to select from for reforming their conditions. They were the raising of their capitals or merging them in order to be capable to compete at this age of globalization.
The Central bank that the minimum limit of the paid capital should be equal to $ 30 million, i.e. YR 6 billion for any new bank or foreign branch wishes to work in Yemen. Mr al-Samawi also said that the banking activity in Yemen had seen great developments especially activity of commercial banks that possess 170 branches in various governorates of the country. Mayor of the central bank had made it clear that commercial banks were endeavouring use hundreds of machine cashiers in town due to the trust their services receive from the public.
The volume of deposits accumulated at the commercial banks has amounted to around YR 520 billion and their assets amounted to more than a billion dollars. The central bank mayor also confirms that the activity and development of commercial banks is ascribed basically to improvement in performance of the Yemeni economy and that has pushed international establishments of evaluation to raise their credit evaluation of Yemen to from c- to b+. Mr Samawi also sees that the Yemeni market has. During the past years, witnessed stability in the exchange prices and reserves had been built estimated at over $ 5 billion. The external balances have achieved large surpluses and Yemen has met all of its dues to the world.
On the other hand, the mayor of the central bank has disclosed the existence of a noticeable drop in the banking awareness in the society and that it affects the banking activity. He says there are 600 thousand bank accounts in the Yemeni banking sector and no more than 500 thousand to 600 thousand cheques are annually circulated. Hence, according to the mayor of the central bank, there should be an effort exerted for upgrading the banking situation among members of the society.
He has also called on commercial banks to follow all possible ways and means for attracting citizens to deposit their money in the banks in order to enhance and develop the banking work in the economic activity and the process of construction and development.
However, the low level of liquidity volume among the population and drop in levels of income, affect the volume of deposits of citizens more than low banking awareness among members of the community.
What is the more important in all this is whether plans of the central bank would succeed for the reform of the Yemeni banks' conditions under the problems they are facing, particularly those banks that suffer from floundering in regaining their loans from borrowers.
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