The Central Bank of Iran (CBI) has issued a bylaw calling on banks to increase financing to the manufacturing sector, a policy that officials say is in line with the “resistance economy” -- a set of guidelines proposed by the Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei to counter sanctions, promote domestic growth and reduce reliance on oil revenues.
The CBI intends to adopt fresh policies to help allocate financial resources to the sector which it sees as the main prerequisite for sustainable economic development, according to the CBI’s website on which a copy of the bylaw is available.
Currently, firms which have abundant potential for profit and their activities are economically justifiable have been listed as debtors to the banking system and cannot receive new loans to solve their working capital inadequecies.
Soon after the rial crashed in 2012 against other currencies, many manufacturers found themselves unable to repay their debts.
Due to a combination of inflationary pressures and financial sanctions the rial lost aroun 70 percent of its value during the period.
The CBI has now put forth certain conditions for financing the losers, calling on banks and credit institutions to give the following cases priority in granting loans.
Firstly, if a manufacturing firm has been hurt by the macroeconomic conditions it can now receive new loans but needs good credit rating.
Financing can also be provided to the units which have used their previous loans for the exact purpose they had agreed with the banks.
Manufacturing units that have not had layoffs can also be recipients of new loans.
Loans can even be provided to the units which have terminated some of their staff but would be able to rehire them if they receive new loans.
Meanwhile, if a manufacturing unit suffers from cash flow problems because of a failure of a state-run organization in repaying its debt to the company, the manufacturing unit is still qualified for a new loan.
And finally, firms that can export their products and services once they use the loans, can be provided with financial assistance.
