Economy, Business And Markets

Gov’t Banks Banned From Purchasing Participatory Bonds

Gov’t Banks Banned From Purchasing Participatory BondsGov’t Banks Banned From Purchasing Participatory Bonds

Banks will no longer be allowed to purchase participatory bonds, stated deputy minister of economic affairs and finance Shapur Mohammadi.

The official explained that for the following year, trading participatory bonds will be limited to the equity market, Eghtesad News reported.  

A major part of governmental debts to banks are due to participatory bond trades and the fact that government owned banks have been purchasing the bonds.

Next year’s budget bill stipulates that participatory bonds with an overall value of 300 trillion rials ($10.7 billion) shall be available for purchase in the coming year. Experts have warned that this measure would eventually increase government debts to the banking system.

To avoid such problems, the official stressed that banks will not be permitted to purchase participatory bonds.

According to Central Bank of Iran’s deputy for credit affairs, Ali Asghar Mirmohammad Sadeghi, the entire value of participatory bonds which have been purchased by government owned banks is nearly 164 trillion rials ($5.8 billion at official exchange rate).