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NDFI, EDBI Cooperation Will Help Boost Exports

NDFI, EDBI Cooperation Will Help Boost ExportsNDFI, EDBI Cooperation Will Help Boost Exports

The Export Development Bank of Iran (EDBI) plans to cooperate with the National Development Fund of Iran (NDFI) to boost export activities, an official said on Monday.

A memorandum of understanding is expected to be signed between the two sides by the end of the fiscal year (March 20). Thereby, the NDFI will deposit one billion dollars with the bank, stated EDBI Director Ali Salehabadi.

Depending on the potentials of the bank “the amount could increase further,” the banking official said at a press conference.

If carried out, the investment will help provide more financial services to export activities.

 EDBI Policies

EDBI officials say they adhere to three main policies which are in line with the ‘resistance economy’ – a set of guidelines introduced by Leader of Iran’s Islamic Revolution Ayatollah Seyed Ali Khamenei – and seek to reduce the country’s reliance on oil exports

EDBI was established with the vision to promote exports; specifically non-oil based exports, and has been offering diverse foreign exchange and international banking services.

Development banking does not focus on businesses it rather uses financial resources in the sectors which can eventually promote economic growth.

Firstly, exports must be economically justifiable, a fact that is even more important than the profit exports will yield.

“Although profit is important, it is only the second priority of the bank,” Salehabadi said, clarifying that the top policies are to mainly provide loans to manufacturing and industrial units.

The third priority is to finance other development projects which do not fall under the first and second priorities, he added.

On sanctions, the official said that “whether sanctions remain the same, are intensified, or lifted the EDBI is prepared for all three scenarios.”

If sanctions are lifted the methods which the bank intends to apply are to resume cooperation with top international banks and introduce fresh visions for entering new target markets, he explained.

 Development Banking

Development banking mainly focuses on manufacturing, which can also yield profits, the official said.

Development banking also needs its own exclusive set of regulations. Currently all banks follow the same regulations, as an example, the interest rates set by the Central Bank of Iran are the same for all banks regardless of whether they are commercial or specialized, he noted.

The structure of development banks such as EDBI or Bank of Industries and Mines however is completely different from that of commercial banks. A number of workgroups consisting of specialized banks have thus been created and are operating to formulate specialized regulations exclusively for development banks.

Development banks face two major problems as they need to deal with market risks and rising NPLs or non-performing loans at the same time.

The official stressed that it is necessary to create committees specialized in increasing the capital of development banks with the support of the government and parliament.

Financialtribune.com