Banking Gone Awry
Economy, Business And Markets

Banking Gone Awry

Commercial banks ventured into business activities with the implementation of Article 44 of the Constitution, a top finance and banking expert said on Wednesday.
Speaking at a banking conference at the Faculty of Management at the University of Tehran, Heidar Mostakhdemin Hosseini said “An evaluation of the performance of foreign banks shows they never distanced themselves from their main mandate of financial intermediation by engaging in business activities.”
He regretted that commercial banks in Iran own over 400 businesses apart from their regular affiliated companies, and said, “Such a situation is not as rampant in other developing countries as it is in Iran.”
On the root causes of the problem, Hosseini said “the government itself is the main force driving commercial banks into business activities and the issue escalated during the privatization process implemented under the amendment to Article 44 of the Constitution.”
He recalled that before the 1970s, three groups of banks namely commercial, specialized and development banks operated in the country. However, in the 1980s, development banks with direct access to the state budget and able to finance development projects were merged with the other two categories.
“As the government did not have sufficient resources to finance projects, specialized banks that were initially responsible for funding specific sectors were allowed to carry out business activities,” he said.
“It was a wrong decision to merge the banks before they were fully developed because the burden of financing development projects largely fell on the commercial banks that were created for short-term finance.”
As a concrete solution to expedite the completion of pending development projects, Hosseini recommended the authorities to revive development banks and offer their shares on the stock market.


Short URL : http://goo.gl/kaKE4p
  1. http://goo.gl/G2Yl6j
  • http://goo.gl/65lheU
  • http://goo.gl/o125bs
  • http://goo.gl/jpZgxy
  • http://goo.gl/ky8Wcv

You can also read ...

European Gov’ts Exploring Financial Channels for Iran
The French, British and German governments have told Iran they...
EU to Protect Firms in Iran Following US Refusal to Grant Waivers
EU countries on Monday gave European firms legal cover to...
Cuba Rolling  Out Mobile Internet Services
Cuba has started providing Internet on the mobile phones of...
Wheelbarrow Tires Imported From Three Countries
Close to 853 tons of wheelbarrow tires worth more than $1.8...
Non-Oil Trade With China  Up 10%
Iran traded 7.38 million tons of non-oil commodities worth $5....
IMIDRO Outlines Q1 Downstream, Upstream Steel Performance
A total of 11.22 million tons of iron ore concentrate was...
Biggest Privatization Bid of the Year Set for July 31
Iranian Privatization Organization is scheduled to stage the...
$312m Paid in Travel Currency in 3 Months
A total of $312 million were allocated by the Central Bank of...