Foreign investment and finance is important to complete pending projects, said Abdol Naser Hemmati, CEO of Bank Melli Iran. He said domestic banks had provided 90% of the credit needed for projects in recent years which is a big burden on the lending industry.
Hemmati who heads the Coordination Council of Public-Sector Banks complained that overdependence on local banks has created a litany of problems.
“Sanctions deprived the country of foreign credit, paralyzing the financial system and the banking sector. We cannot access foreign credit and assets,” he said, referring to nuclear-related economic sanctions which are expected to be lifted by early 2016.
Speaking at the bank’s board meeting in Zahedan, the capital of Sistan- Baluchestan Province, he said access to the National Development Fund of Iran had also been disrupted due to the decade plus sanctions, IRNA reported.
Hemmati hoped the implementation of the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), signed in July between Iran and the six world powers would help mitigate the woes of the financial and banking systems.
Lifting of the sanctions will help “reconnection to international banking and trade” while prompting a “revival of foreign trade and investment.”
Developments
He highlighted the role of banks in the post sanctions era saying that banks serve as the major institutions for channeling credit and cash.
“Bank Melli will reinvigorate its international ventures after the lifting of sanctions. We plan to reactivate branches in other countries and utilize our foreign assets. We also have plans for using foreign “finance” and “refinance” to augment our resources.”
Hemmati noted that the banking sector’s annual turnover is 8 quadrillion rials ($ 265.2 billion) and urged the lenders to take measured steps in their ventures. “Any mistake on the part of the banks could lead to ripple effects,” he warned.
Supporting Exports
To help develop the economy closer attention should be paid to industries, agriculture, services and exports and BMI is willing and able to cooperate with businesses in these sectors.
Hemmati was of the opinion that banks can help complete the projects in Sistan and Baluchestan. “Lenders can also cooperate with provincial officials in exporting to neighboring countries like Afghanistan and Pakistan.”
On the plunging oil prices he said banks are ready to mobilize their resources to help foster economic growth and help the government. “Only 25% of the next year’s budget is based on oil revenues while the remaining 75% is expected to be realized through non-oil revenues.”
Overseas Operations
Creating “acclimatizing units” and connecting to the [international] clearing system are prerequisites for the banking system to restart overseas operations, said the head of Bank Melli Plc London.
“Central Bank of Iran’s role is important for reestablishing overseas operations,” ISNA quoted Mohammad Hussein Zafarani as saying at a meeting in Tehran with officials from several banks on Tuesday.
Acclimatizing units would help banks’ overseas branches and subsidiaries incorporate developments in related areas such as money laundering, capital adequacy, internal audit and terrorism funding.
He also elaborated on his bank’s potential for cooperating with Iranian banks through services like “financing projects, refinancing and syndicate loans.”
Gholamreza Panahi, a member of Bank Melli’s board of directors, also said banks’ overseas branches and subsidiaries have a vital role to play in promoting foreign trade in the post-sanctions era.
Melli Bank plc, incorporated in 2002, is based in London and operates as a wholly owned subsidiary of Bank Melli. The bank has a branch in Hong Kong and a representative office in Tehran.
