EghtesadOnline: A member of Tehran Chamber of Commerce, Industries, Mines and Agriculture has welcomed the government’s measure to revaluate the Central Bank of Iran’s foreign exchange assets to increase the lending power of banks, saying the move had been a “last resort” to make up for lenders’ capital shortage.
“Increasing the lending power of banks is necessary since they have paid more loans than their resources allowed and it seems that the government has no option but to revaluate the banks’ overseas assets,” Ahmad Kimiayi was quoted as saying by TCCIM’s website.
Government Spokesman Mohammad Baqer Nobakht had announced earlier that in order to increase the lending power of the banking system, public-sector banks in particular, President Hassan Rouhani’s administration will focus on two sources.
“[The government] will issue 700 trillion rials ($18.2 billion) worth of bonds to repay its debt to banks and the private sector,” Financial Tribune quoted him as saying.
Nobakht then pointed to articles 35 and 36 of the budget amendment law, which allows recapitalization of public-sector banks from revaluation of foreign exchange assets as the secondary source.
Kimiayi noted that while banks normally cut back on lending in the last month of the Iranian fiscal year [February 19-March 20] to conduct their annual auditing, this year they have stopped allocating loans a month earlier, which has put strains on businesses.
“Unexpected decisions have always damaged the economy. Putting a halt on lending a month earlier and altering interest rates three times in this year are issues troubling businesses and this has made forecasting difficult,” he added.
Kimiayi, however, hoped that the economy will pick up in the coming year and added that if the banks continue their speculative activities and do not support the production sector, the recession in manufacturing sector will continue in the next Iranian year(starting March 21).