Preventing "usurious transactions"... A Houthi "separatist" law threatens to bankrupt commercial banks

English - الخميس 09 مارس 2023 الساعة 05:50 م
Sana'a, NewsYemen, exclusive:

A parliamentarian residing in Sana'a revealed the Houthi group's insistence on passing a law called to prevent "usurious transactions", amid local and international warnings of catastrophic repercussions of the law on commercial banks in Yemen and the economy in general.

Representative Ahmed Saif Hashed said in his posts on his "Facebook" account that the Finance Committee in the House of Representatives of the Houthi group neglected to address the issue of "forgotten transfers" because it is currently busy discussing the law and presenting it to the parliament for approval.

While Hashid revealed that the Houthi group paid special and exceptional attention to passing the law, he conveyed warnings from an "informed source" of the repercussions of the law on the banking sector in Yemen and that it would lead to the closure of banks and the collapse of the entire banking system.  He pointed out that 4 banks have left Sana'a and the rest of the banks will join them or close their doors.

These warnings are confirmed by the latest report issued by the Committee of Experts of the UN Security Council, which referred to the adoption of the law by the Houthi government in September last year which prohibits all kinds of interest on deposits, loans, letters of credit and guarantees.  Amid strong opposition by the Yemeni Banks Association and the Chamber of Industry and Commerce.

The report says that by passing the law, banks will not be able to provide credit facilities for commercial activities, noting that millions live in Yemen, especially pensioners, on monthly interest earned from their bank deposits, warning of the danger of applying the law.

Among these warnings, the report expects that the application of the law will push clients of commercial banks to withdraw their cash deposits at once in a way that causes panic in the banking system, stressing that commercial banks will not be able to meet this sudden demand due to lack of liquidity, which will make them face the risk of bankruptcy and closure.

The report indicates one of the most important dangers of the law, with the Houthi group preventing interest-bearing transactions with commercial banks in its areas of control, while dealing with them continues in the liberated areas, which will lead to "a complete division of the banking and financial sector in Yemen," says the report of the Committee of Experts.

In its report, the committee confirms that the adoption of the law, along with the procedures and steps taken by the Houthi group to "divide the banking and economic sector in Yemen," such as banning the new currency, attacking the assets of telecommunications companies based in Aden, and attacks on oil ports, represents a "serious threat to peace, security, and stability."  in Yemen and requires urgent international intervention.

And within the framework of its intention to pass the law, the Houthi group confiscated the funds of commercial banks that invested in treasury bills during the past years, amounting to about 1.7 trillion Yemeni riyals (about 3 billion dollars according to the exchange rate in Sanaa), in early January.  Sanaa, which is under the control of the group, by transferring them to non-withdrawal current account balances, meaning that no interest is charged on them.