EghtesadOnline: Since February 2017 when the Cabinet first approved that penalties for non-performing loans will be waived for loans up to 1 billion rials ($28,178), about 8 trillion rials ($213 million) of fines have been waived and the banking system has recovered more than 1.6 trillion rials ($426 million) in bed debt, said the chairman of Majlis Planning and Budget Commission.
"Last year, fines for non-performing loans were waived for up to 1 billion rials ($28,178) and I hope that in the current year, resources will be sufficient to allow all loans below 10 billion rials ($280,200) to be announced clear from late payment fines," Gholamreza Tajgardoun was also quoted as saying by Banker.ir.
The Iranian banking sector’s ratio of non-performing loans stood at 11% by September 20, down from 13.6% in September 20, 2014.
Valiollah Seif, the Central Bank of Iran's governor, believes that the immaturity of the capital market, dominance of banks in financing the business sector and insistence on using banks’ limited resources for solving structural problems of the economy were the main causes of growth in NPLs in recent years, Financial Tribune reported.
The CBI governor called on bankers to continue taking calculated measures “until the ratio reaches the 5% goal”, which he says is of high importance for the country.
Back in November, a study conducted by CBI found that covert internal workings of Iranian banks have largely contributed to their high rate of non-performing loans.
It was reported that the remaining NPLs of banks more than quadrupled from 204.87 trillion rials ($6.4 billion) in 2007 to 863.42 trillion rials ($27.1 billion) in 2015.
Banks have recovered 203 trillion rials ($6.3 billion) of their non-performing loans in the past three years.
Tajgardoun also said that there were concerns about a 15% budget deficit that could lead the government to withdraw from the National Development Fund but fortunately taxes, customs duties and oil revenues covered the expenses in the final days of the previous year.
"The parliamentarians authorized the government to issue Islamic bonds, through which the government lightened its debts, paying 150 trillion rials ($4 billion) to contractors, 25 trillion rials ($666 million) to municipalities and 80 trillion rials ($2.1 billion) to insurances," he said.