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EghtesadOnline: Bank Melli Iran, the biggest bank in the country said Saturday that it had succeeded in attracting the highest volume of cash both in long-term deposits and Qarz-ul-Hasana (usury-free) saving accounts in the first seven months of the current fiscal that started in March.

Making do with growth in percentage terms and without providing real numbers, the BMI public relations office said it had “attracted 32.48% of the total long-term deposits of the banking industry” over the period and topped the list, IBENA reported. 

Balance of these two types of accounts that seemingly have the largest turnover in and among all lenders, with BMI compared to the balance in the same period last year was “over 17%.” 

The lender added that in the usury-free savings account (short-term) sector it attracted 26.48% of the total deposits of all local banks during the seven months, according to Financial Tribune.

In the same category, BMI’s total deposits in the period compared to the last month of the last fiscal (Feb. 20 to March 20) shows “7% growth”. 

By the same token, the lender said it had been able to raise the highest amount of funds in rials and foreign currency “accounting for 22% of the total” during the seven months and “registering 13% growth.”

BMI said in the Iranian month of Mehr (Sept. 23-Oct. 22, 2019), it held “35.18% of total deposits with banks and credit institutions in Iran. 

It is not clear to what extent BMI and the other major lenders are giving money to companies to sustain and grow their business. 

At regular intervals the government and its envoys keep telling all those willing to listen that they are keen on “extending billions in credit” and salvaging companies in need.

How much credit is pledged is well known, but much is released is hardly reported. What is certain is that the government ostensibly “orders” state-owned banks to rise to the occasion and make the loans. But what remains uncertain is whether the banks comply. If they have, one may ask to what degree and at what interest rates. 


Two-Way Plight 

Economic and financial experts have for years warned the government that the domestic banks are in bad health largely due to troubled credit and distressed debt. Lending and borrowing has become a serious concern for the economy because companies are buried under high interest rates and low profitability.

On the other hand banks are unable and unwilling to lend to cash-strapped manufactures because many, if not most, companies have borrowed in huge amounts and have not been able to repay the loans. 

The regretful outcome has been that as conditions get tough creating a tsunami of bad loans, sick banks have choked off credit to companies in need or on the verge of insolvency due to lack of liquidity, recession, inflation and rising prices of raw materials.

Impaired loans and the recession have made a bad situation worse and have been punishing the economy for years. The added problem is the new US sanctions announced by Donald Trump last year.

Private companies make no secret of the fact that all things considered they are unable and unwilling to approach the banks for credit because “the interest rates are prohibitive.” 

An owner of a company producing moquette in the central city of Yazd told the Financial Tribune in spring that he would have to “down the shutters sooner rather than later.” Asked why, he said, “Domestic sales have come close to zero. Above all bank interest rates of  nearly 27% is beyond our comprehension.”

Iran Bank Melli Iran BMI Good Shape cash long-term deposits Qarz-ul-Hasana saving accounts