Economy, Business And Markets

Banking System to Retain Stature

Banking System to Retain Stature
Banking System to Retain Stature

The banking system is seeking to retain its reputation once distorted by the previous administration, claimed the governor of the Central Bank of Iran on Monday.

"The turmoil which had prevailed market before the new administration took office has now disappeared," said Valliollah Serf during a speech in the northwestern province of Zanjan. "The wrong economic policies adopted in the past years led to the tripling of foreign exchange prices" in recent years, said Seif.

"Now the market is experiencing relative stability," he said proudly. Since last year, the dollar, as a major foreign currency in Iran, has been traded between 30,000 rials and 32,000 rials.

More than one and a half year ago, the former government tried to inject $22 billion into the foreign exchange market, in an effort to regulate it, a decision that "practically proved to be unsuccessful as it led to further increase in foreign exchange prices," he added.                                                                            

Average price of foreign exchange has decreased by 7.5 percent last year compared to the year before, said the governor, adding that “the fluctuations in the foreign exchange also decreased by 60 percent in the same period.”

 Funding for Industries and Mining

During the past 6 months, the banking system has financed 59.7 percent of the working capital needed in the country.

The banking system has provided nearly 80 percent of the working capital needed in the industry and mining sector in the past year in the form of loans, said Seif.

The government, in its plan of action which seeks to exit recession, has seen commercial banks as a key player in providing loans for small and medium sized businesses.

Seif urged policymakers to further help boost the economy by enhancing their lending power. But he underlined that the banks must target “right” businesses to offer loans.

 Unauthorized Institutions

Unauthorized credit and financial institutions in the country have requested to get license for their activity, according to a central bank official.

Speaking on a televised program on Sunday night, deputy governor of the Central Bank of Iran for supervision, Hamid Tehranfar, said the bank “does not want to make people worried about the activity of these (unauthorized) institutions as all of them are seeking to receive the bank’s approval for their activity.”

His comments came a day after the central bank released a list of authorized banks and financial institutions, implying that those absent from the list “unauthorized.” The list included all “banks, financial institutes, and other institutions for which the bank has issued licenses for establishment and activity.”

Although the CBI announced that it relieves itself of the responsibility for any possible damages that may be caused by the operation of such institutions, on Sunday’s program, Tehranifard stated, “They (unauthorized institutions) will get their certificate in two month time.”