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EghtesadOnline: The Central Bank of Iran is expanding the scale of its monitoring of banks’ lending policies with the help of innovative IT tools.

The regulator has set up two IT-based platforms to look at all the specific ways and means banks use to give loans, the CBI said in a press release.

“In the absence of strong supervision and lack of integrated data, banks in the past gave loans without proper investigation into customers’ credibility and the outcome has been a large volume of NPLs,” the CBI said.   

“Moreover, the regulator was unable to regularly monitor banks’ financial structures and their lending performance [preferences]” as would have been expected.

The issue of credit rating has drawn immense attention and criticism as an increasing number of big defaulters has led to the emergence of unhealthy banking and the piling up of failed investments for which banks and their managers are largely held responsible.

Struggling with high NPLs, the regulator has voiced concern about lack of strong supervision over loans. It has mandated banks to provide full details of borrowers, their economic status and people appointed as beneficiaries of their bank accounts.

The CBI said it has designed a system to access data of banks and allows direct interaction among bank branches, sharing customers’ data and enabling lenders to ensure the eligibility  of borrowers.

Dubbed as “Samat”, the system gives online access to all bank branches on borrowers lending profile, banking guarantees given by banks and outstanding debts.

“The system should maximize transparency in lending and curb risks to the banking system,” the CBI said.

Samat updates credibility of deadbeat customers on a daily basis and communicates data to bank branches across the country.

The CBI said it has designed another supervisory system called “Zinaf-e-Vahed” (Persian for single beneficiary), which is technically in palace but needs input from administrative bodies and relevant centers to become operational.

“Single beneficiary” is defined as the financial relationship among two or more legal or real entities that are exposed to risks. Riding commitments to banks, inability of one party in reimbursing debt will be extended to all other partners.  

“Setting up this system will go a long way in curbing misspending of banking resources and minimize NPLs,” the CBI said without elaboration.  

Inflicting Harm

High NPLs have long harmed banks and their ability to lend to credible manufactures and businesses, not to mention that their mountain of bad debts has also hurt their standing among the people.

Despite a relative decline in recent months, NPLs of Iranian banks are often higher compared to their peers in the developing and developed world where it is mostly in single digits and usually below 5%.

The NPL ratio declined to 6.7% in end of fiscal 2020-21.  It was also down 25.6% in 2019-20.

NPL ratio is the ratio of the amount of nonperforming loans in a loan portfolio of banks to the total amount of outstanding loans the banks hold. The ratio measures the ability and effectiveness of a bank in receiving repayments on its loans.


CBI Central Bank of Iran Banks