Economy, Business And Markets

Backing for Gov’t Banking Policy

Backing for Gov’t Banking Policy Backing for Gov’t Banking Policy

In an address to the Public-Private Dialogue Forum in Khoramabad, Lorestan, Justice Minister Mostafa Pour-Mohammadi has voiced support for the administration’s idea that banking structure needs overhaul.

Pour-Mohammadi said the government truly believes that revising the monetary system is the base for a healthy economy.

The minister also criticized the high amount of NPLs or non-performing loans held by commercial banks, saying the monetary and financial system is “generally in trouble” due to the problems stemming in the past. “The system is dominated by lack of discipline.”

Last week, Gholam Hossein Mohseni Ejei, spokesman for the judiciary, also called on the government to address NPLs problem in the banking sector.

Criticizing the so-called “quick return businesses” for lack of proper functioning, Pour-Mohammadi said that the firms received more than 190 trillion rials in loans from banks between 2005 and 2007 but have not yet paid the money back. The figure in today’s exchange rate exceeds 700 trillion rials ($20 billion) in value, he added.

The majority of toxic loans have been given to quick return businesses, he stated, criticizing the former administration for forcing banks to give such loans.

On illegal activity of certain banks and financial institutions, the minister said that among the 26,000 bank branches all over the country, “some banks do not have any clear-cut definition.”  The central bank has recently stepped up pressure on banks and financial institutions urging them to avoid offering higher deposit interest rates than the ceiling agreed upon by banking officials.