S D F G

Sudan Democracy First Group

Sudan Banking System

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Executive Summary

The paper aims to analyze the banking system in Sudan, from its foundation in 1960 to date, in detail. It discusses the major differences in the banking system before and after the incumbent regime ascended to power in June 1989 through a military coup, calling itself the Salvation (Ignaz) regime (now known as the National Congress Party (NCP), with respect to huge variances in the prevailing supervisory and regulatory frameworks.

 

The paper also demonstrates that the Sudanese banking system lacks political, operational, and financial Independence due to frequent intervention from government and also other influential and corrupt persons in the banking business. The paper also sheds light on the negative practices and non-compliance of various banks with Central Bank of Sudan (CBOS) regulations, circulars and guidelines. The paper gives many examples of corrupt practices and their impact on the public interest, especially the exploitation of banks’ funds and resources for the personal interests of ruling NCP executives at the expense of the public interest.

 

However, CBOS Banking Supervision Department’s reports pertaining to mismanagement of banks General Managers’ negative practices, corruption networks, including the misuse of depositors’ funds by the Boards of Directors (BoD) and major shareholders of banks, huge volumes of bad debts (non-performing loans), etc., are neglected by CBOS Senior Management, because of their fears from the influential executives.The paper reveals that political intervention has significant influence on the performance of the banking system, especially on the banks’ executive decisions with respect to the extension of credit, providing finance to specific segments of society, priority in the allocation of foreign currency resources, recruitment and selection of employees, and promotion.

 

As a result, poor persons in the general public were totally deprived of banking access as a result of the prevailing inequality and discrimination.The paper concludes by laying out a broad set of challenges currently facing the banking system in Sudan, such as ineffective policies issued of the CBOS, spread of corruption, US Sanctions, blocking access to external financing from international financial institutions (IFIs), liquidity squeezes by the CBOS, and lack of corporate governance.

 

The paper also provides set of recommendations to tackle these challenges, such as promoting the public’s confidence in the banking system and ensuring its stability, anti-corruption mitigating strategies, improving the correspondence banks relationships, promoting good market practices and ensure high standards of corporate governance and regulatory frameworks to prevent corruption and ensure a sound, healthy and resilient banking system in Sudan in the near future.

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