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Loan-Starved Banks Playing Safe

Loan-Starved Banks Playing Safe Loan-Starved Banks Playing Safe

The long and lengthy loan processing at banks is affecting most economic sectors and is due largely to the lenders’ limited resources, said Ali Asghar Mirmohammad Sadeghi, head of Central Bank of Iran’s Department of Capital.

The official said he loan-starved banks have little option but to play safe and be as sparing as possible with their scarce resources. “What is important in the banking sector is to assess the customers’ creditworthiness, companies’ credit rating, their overall debts, as well as the areas where they want to use the loans.” he was quoted as saying by ISNA.

Asked about the volume of credit and loans allocated to the tourism sector in the past two years, Sadeghi said the controversial but compulsory, government-imposed loans -- in vogue during the previous administration -- are now a thing of the past. He stressed that if the proposed tourism schemes are feasible, banks will be more than willing to lend.

 “Injecting capital into companies and businesses active in industry, agriculture, trade and services, of which tourism is a segment, has been among the lenders’ priorities in the past two years. And as the official statistics show, 60% of banks’ lending has gone into to this cause.”

The official reiterated that loans should be directed toward economically feasible projects, which “has been the case in the past two years.”

 “The government is responsible for providing the subsidies for loans imposed on banks by official decree. We recommend that the government refrain from ordering compulsory loans in the first place,” he added.

Financialtribune.com