18635
Banks’ Capital Not State Property, Minister Says
Economy, Business And Markets

Banks’ Capital Not State Property, Minister Says

Minister of Roads and Urban Development Abbas Akhoundi said the former administration's intervention in banking affairs has "weakened" and "crippled" commercial banks.
"Any government intervention in banking affairs is a betrayal of trust and would disrupt the contractual relationship between banks and depositors," IRNA quoted him as saying on Tuesday.
Addressing a ceremony to inaugurate a new mortgage scheme in Bank Maskan, he said banks' capital is the savings of people and bankers are obliged to use the savings in the best interest of depositors.
"This principle is contrary to top-down rulings that have an attractive facade but in reality are detrimental to people's savings," he added.
The former government put banks in a predicament when it forced them to grant loans to many unproductive projects and now "we have to be extra diligent in our decisions," he said.
The minister noted that "capital shortage" and "financial strains" have been instrumental in creating the current plight of banks and said the ministry of roads and urban development would never ask for aid from the central bank.
"Borrowing money from the central bank would increase money supply and this will have negative impacts on the economy," Akhoundi warned.
Massive government borrowing from banks by the former administration drained the lenders of their capital and left a mounting debt for the Hassan Rouhani administration, which has been piling up ever since . The government’s debt to banks rose 29.5 percent to 980 trillion rials ($35 billion at official exchange rate) during the 11 months to Feb. 19, central bank data shows.
The government’s debt to the banking system, coupled with roughly the same amount in non-performing loans and the operation of unauthorized financial institutions, has crippled Iran’s financial system and led to poor business performance.

Stimulus Package
Akhoundi hailed the recent initiative to raise the mortgage ceilings as an "auspicious event" which he expected would at last heat up the frozen property market.  He called on Bank Maskan – the traditional housing bank – to play a more active role in the housing market.
"Bank Maskan as a technical and development bank should help middle class households buy houses after making the necessary deposits," the minister said.
The Money and Credit Council, the highest policymaking body of the central bank, agreed May 19 to almost double the borrowing limit for first-time buyers in Tehran to 800 million rials ($24,000 at the market exchange rate). But to receive the loans, the applicant must deposit 400 million rials for at least one year.
Under a second approval of the MCC, non-first-time buyers would receive maximum 600 million rials ($18,000) in loan from any commercial bank in Tehran. If applicants live elsewhere, in the cities categorized as "large" or "other urban areas," they may receive 500 million or 400 million rials ($15,000 or $12,000), respectively.
The stimulus package has drawn criticism from some analysts and lawmakers as being "a drop in the ocean" which would do little to help people actually buy homes. Given the average price of an apartment per square meter in Tehran — 38 million rials ($1,150) in the month ending April 20 — a 75-square-meter apartment costs 3 billion rials ($87,000),  nearly four times the value of the loan, while ideally a housing loan should cover at least 80% of the home's total value.
Akhoundi said his ministry intends to empower Bank Maskan by "doubling its capital" and "detoxifying its assets." He added that currently urban development in Iran lacks the support of a monetary and financial structure and hence the need for Bank Maskan to come up with innovative methods to create "regional funds" to help complete big projects.
"The construction sector is a special venue and Bank Maskan can lend a hand in mass construction in new suburbs and for refurbishing distressed areas as well as providing home buyers with the initial fund," the minister emphasized.   

 

Short URL : http://goo.gl/0CoHQ1

You can also read ...

Turkey to Defy US Sanctions, Maintain Trade Ties With Iran
Turkey intends to defy US President Donald Trump and continue...
An Iraqi peddler displays Iranian currency for sale in the capital Baghdad on Aug. 9.
Iraqi Prime Minister Haider al-Abadi has raised the level of...
CBI Delivering 2.5m Presold Gold Coins
The Central Bank of Iran has started the delivery of 2.5...
Google Rolls Back Android Messages to Old Design
On Thursday, it looked as though Google was starting to roll...
Iran Chamber of Commerce Urges FATF Compliance
Iran Chamber of Commerce, Industries, Mines and Agriculture,...
Private Housing Investments Rise
The uptrend in private sector investments in the housing...
New Foreign Exchange Policy:  Exporters’ Savior or Bane?
The new forex policy, announced last week by the Central Bank...
Hoarded Goods Worth $40m Confiscated in Tehran
Essential goods worth 3.2 trillion rials (around $40 million)...

Trending

Googleplus