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NPLs Down 2%
Economy, Business And Markets

NPLs Down 2%

Stressed assets of Iranian lenders have declined from 14% to 12%, First Vice President Es’haq Jahangiri said in Tehran on Tuesday. He, however, acknowledged that the bad loans remain a major concern for the government.
In a meeting with the governor of the Central Bank of Iran and senior monetary officials, Jahangiri pilloried borrowers unwilling (some say unable) to repay their loans, but said some of the defaults were due to the "international sanctions and bad economic conditions". Despite the huge challenges the banks are facing, he called for supporting the companies saddled with bad loans and help them recover their balance sheets, CBI's website reported.
Last year, Jahangiri had put the total amount of bad debts at 820 trillion rials ($33 billion) -- a 12-fold increase from 70 trillion rials in 2005, when Mahmoud Ahmadinejad took office. The bad debt hole has hampered President Rouhani's plans best efforts to boost employment and raise living standards.

Growth
Jahangiri said in order to achieve the target 8% growth Iran annually needs $50 billion in foreign investment. “Iran should become the number one economic power in the region by 2025."
He pointed to the negative effects of the nuclear sanctions on the banking system and commended the CBI for its role in "helping maintain economic stability" during the tough times.
“CBI is in charge of managing foreign financial resources, controlling government accounts and monitoring how the country is meeting its international commitments. The central bank should prepare a plan of action for financing the production sector in the post-sanctions era.”
Bank managers need to "make bold decisions" when it comes to clearing bad loans, he told the officials.
Jahangiri called on the CBI to unify the foreign exchange rates and said the government is vigilantly pursuing the critical issue.
“CBI’s comprehensive plan for the resistance economy’ will soon be approved by the government and we hope it will help the economy get back on its feet.”  
Resistance Economy is a set of guidelines promoted by the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei to enhance the country's self-sufficiency and lower the economy's reliance on oil exports.  
 
Single Currency Rate
Valiollah Seif, the CBI chief also said a single foreign exchange rate has a major role in improving economic stability and the Central Bank of Iran is striving to create the conditions for unifying forex rates,.
“Implementation of the nuclear accord between Iran and six world powers has indeed paved the way for unifying currency rates. We should be able to have a single rate within six months,” he said.
Iran reverted to the dual exchange rate system in 2012 when the international economic and banking sanctions were intensified over the nuclear dispute with the US-led western powers.  Seif and other senior officials had announced earlier that a return to the single exchange rate would be possible only after the sanctions are lifted.
The bank governor pointed to the meeting with Jahangiri and other senior bankers saying the session was held to reevaluate "the role and influence of the banking industry in the post-sanctions era.”  
“We discussed several issues including the banking system’s post-sanctions mission,” he said without elaboration.
Seif referred to the credit crunch besetting the economy and said the regulator is trying to settle this issue and is also updating the standards of the banking sector.
Singling out low capital adequacy as one of the serious challenges banks are grappling with, he said, “The capital adequacy ratio in international banks is close to 12% while it is 5.5% for Iranian lenders.”
Seif referred to banks, the capital market and foreign investment as the three pillars of a functioning economy. He highlighted the role of domestic lenders in financing key projects saying “The share of domestic banks in financing projects is over 85% while the capital market and foreign investment's share is hardly 15%."

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