The Central Bank of Iran is intensifying controls over bank loans via electronic platforms, head of the CBI public relations department said.
In a note posted on his social media account, Mostafa Qamari-Vafa said borrowers henceforth must have special accreditation from a CBI platform, known as the Samat, a Persian acronym for Centralized Database for Loans and Commitments.
Processing every loan application is contingent on borrower s getting a confirmation code from Samat, Qamari-Vafa wrote on Twitter.
This measure is to increase supervision on lending, improving transparency and reducing financial pressure on banks, he added.
One function of the Samat system is to electronically block banks from processing and registering loan applications over and above the ceiling set by the CBI.
Banks must now get a special code from the CBI-affiliated Samat before paying the loans. This method will give the CBI access to information on guarantors, collateral and credibility of applicants.
The database will be accessible to all banks across the country and the regulator has banned lenders from giving loans to applicants with poor credit records logged in Samat.
The CBI says Samat and other platforms can and should improve the accountability of lending procedures and replace posterior oversight to prior supervision.
In the past two years and with the monumental growth in broad money, the CBI said it has taken measures to, among other things, improve oversight of banks and augment transparency to curb the harmful growth in money supply.
Stringent control over loans is expected to reduce the bulk of bad loans and help banks recover NPLs. Thanks to poor supervision, the NPL ratio of Iranian banks is higher compared to many developing and developed countries.
In a related decision, the CBI on Saturday banned lenders from receiving collateral in cash from loan applicants. Banks usually withhold a part of the loans as cash collateral while also demanding other collateral.
In a press release the CBI said this practice must end. Withholding a part of the loan is prohibited.
Moreover, banks are barred from keeping loan applicants deposits as collateral before giving them the loan. If lenders do so (special conditions) they have to pay interest.
