The government's debt to four private banks jumped 9% in the first half of the current fiscal year that started in late March.
Electronic Banking journal reviewed the financial statements of the four banks that showed government debt to Tejarat Bank, Bank Mellat, Bank Saderat and Refah Bank collectively amounted to 1,520 trillion rials ($4.28 billion).
Tejarat Bank topped the list with 656 trillion rials ($1.84 billion), followed by Bank Saderat with 602 trillion rials ($1.69 billion). Government's debt to Tejarat and Saderat increased by 8.8% and 9.8%, respectively, in the six months.
Government debt to Bank Mellat posted the highest growth during the period under the review at 10.7% to 177 trillion rials ($498 million).
Government's debt to Bank Refah was the lowest among the four lenders -- 84 trillion rials ($236 million), up 1.2% compared to the beginning of the year.
There was no data on the debt of state companies.
Back in June, Central Bank of Iran Governor Ali Salehabadi said the government was trying to come up with a “sustainable way” to settle its debts to privatized banks.
"The government owes considerable amounts to privatized lenders. President Ebrahim Raisi has required the CBI, the Economy Ministry and Plan and Budget Organization to propose an effective mechanism for the settlement of debts," IRNA quoted him as saying.
Three major public banks, namely Mellat, Saderat and Tejarat, divested shares after the privatization process gathered momentum in the mid-2000s when the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei issued a decree, expounding the Constitution's Article 44 and asserting the private sector as an integral part of the economy.
The government, however, did not relinquish its role completely and kept a 20% share in most of the said banks. This led to the criticism from lawmakers and market players who said it was making a bad situation worse by creating a nebulous entity that poses a bigger threat to the "real private sector".
Almost 16% of Bank Refah is owned by the Social Security Organization, the main social insurance provider for employees of public and private sectors and the self-employed.
Private banks are operating in the country, but in some cases government-affiliated companies and non-government public entities own shares in these banks, making it harder for them to act independently and initiate much-needed reforms.
Last month, the Cabinet obliged the Ministry of Economy to divest the remaining stakes of the government in the three banks.
