Economy, Business And Markets

New Loans for Automakers

New Loans for AutomakersNew Loans for Automakers

A hot debate has been triggered following the announcement that the two major Iranian automakers have been authorized to receive five trillion rials ($147 million at market exchange rate) in loans in the current Iranian year (started March 21).

The announcement has triggered a hot debate in the media and among local analysts who are already sensitive to auto industry updates in light of the recent campaign in social media that encourages people not to buy domestically-manufactured cars, Khabar Online reported on Tuesday.

Last week, a lawmaker said “the proposal to provide loans to the two large automakers is likely.”

Media speculations put the exact amount of loans at 20 trillion rials ($588 million).

An official at the Central Bank of Iran, meanwhile, gave a different narration, saying at a July 28 meeting the Money and Credit Council approved five trillion rials in loans for Iran Khodro and Saipa each.”

MCC has made the decision, regardless of the earlier loan ceilings for the two companies and their outstanding debts, Ali Asghar Mir Mohammad Sadeqi, the director general for credits at CBI, was quoted as saying.

The regulator and MCC are reluctant to exert any influence on the lending decisions made by banks or financial institutions as the banking system is free to lend within the defined legal framework,” he argued.

Mir Mohammad Sadeqi also announced that the regulator is mulling a new proposal that enables banks to stimulate demand in the market by buying the automakers’ debts.

If passed, the automakers can submit the securities purchased by clients in return for car to the banks and receive loans.

“The banks will accept the securities at the agreed interest rate,” he added.