Banks issued 90 trillion rials ($330 million) of “Productive Credit Certificates”, known by its Persian acronym Gam, since the credit finance instrument was launched in early 2021.
According to Hamid Azmand, head of the Central Bank of Iran’s department for Supply Chain Finance, the certificates were issued by 5 agent banks, IBENA reported.
Gam is a market-oriented financial instrument that can be traded in the money and capital markets. Lenders assist credible businesses by offering tradable credit certificates similar to LCs. The certificate can be given to suppliers of raw materials, machinery and equipment.
Like bonds, certificates have maturity dates. The supplier can cash the certificate by selling it in the stock market but money is not exchanged between the beneficiaries.
Gam is one of the integral components of the government’s initiative to implement supply chain finance (SCF). The CBI recently revised guidelines to make the best use of Gam in the SCF scheme.
The SCF program was unveiled by the CBI in January to improve lending efficiency and navigate bank resources toward financing production sectors.
The SCF focuses on credit instruments rather than direct borrowing, minimizing the diversion of bank resources into non-production and speculative markets, plus improve and expand oversight on lending to manufactures.
