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Residential Leasing Scheme in Final Stretch
Economy, Business And Markets

Residential Leasing Scheme in Final Stretch

The real estate leasing scheme is in its final stages, Asghar Mirmohammad Sadeghi, Central Bank of Iran’s deputy for credit affairs, said on Sunday.

“The housing leasing plan has long been on the agenda of Bank Maskan and the CBI. It can meet a part of the demand in the housing market. The scheme will be finalized by the Money and Credit Council by June,” he was quoted as saying by ISNA.

Pointing to ambiguities and speculative activities in leasing companies’ ventures in the past, Sadeghi said that the MCC proceeded to restrict their scope of activities.

“Gradually we came to the conclusion that leasing companies can have an effective role in financing and hence we want to give them a bigger role in the economy.”

Mehr Housing Project

The official referred to the Mehr Housing Project saying that the case of 800,000 unfinished housing units has been presented to the CBI. “We increased the Mehr Housing Project’s credit line to 55 trillion rials ($1.82 billion) from 50 trillion rials ($1.65 billion). And the loan ceiling for each applicant will be increased to 350 million rials ($11,597) from the previous 250 million rials ($8,283).

“The Mehr Housing Project will be completed in the next calendar year (starting March 20) through the cooperation between the CBI and the Ministry of Roads and Urban Development.”

The Ahmadinejad administration launched Mehr housing project in 2007, with the aim of providing thousands of housing units to low-income families.

Marriage Loans

Marriage loans to couples are among the CBI’s priorities according to Sadeghi. He said that 25 trillion rials ($ 828 million) worth of marriage loans has been paid to a total of 721,000 couples. “So far 431,000 people are waiting for their marriage loans.”

Interbank Market

On the issue of interbank interest rates, Sadeghi mentioned the 10% decrease in rates saying that “with the measures taken by the CBI, the banks’ debt to the CBI and the lenders’ overdraft has been largely restructured.”

The overdraft fines of five state-owned banks worth a total 36 trillion rials ($1.1 billion) have been changed to a credit line-through extending their debts- by the CBI in order to enable lenders to gradually pay their debt to the CBI.

“The CBI interest rate for overdraft fees has been cut to 15% from the previous 34%. The rate has been lowered to 10% for Bank Keshavarzi.,” he said.

The private banks’ total overdraft amounts to 46 trillion rials ($ 1.5 billion) which they should clear within six months at an interest rate of26-27%, according to Sadeghi.

Auto Loans

The CBI and automakers have agreed to finance the 20,000 extra cars sold as a part of the 250-million-rial ($8,283) auto loans, Sadeghi said. “The loans will be provided at 16% to customers but the automakers will have to pay 21% interest to the banks which provide the money to the automakers."

"But the CBI lends the money to the banks at 19% for the extra 20,000 cars.”

The official explained that based on the government stimulus package the domestic automakers were allowed to sell up to 110,000 cars but they sold an extra 20,000 vehicles. “The CBI at first did not accept any responsibility for financing the extra cars sold.”

The CBI had committed to finance 110,000 car sales as part of the government’s scheme to help the carmakers and reduce their unwanted inventory last October. It provided the banks with funds needed for the loans at 14% and the automakers had to sell the cars at an interest rate of 16%.

Credit Card Scheme

Asked about the credit card scheme, Sadeghi said the CBI has no data about the number of employees who had registered for the scheme. He however stated that 18,900 people have registered for the scheme who all are newlyweds.

 His comments come as Head of Home Appliances Manufacturers Union said Sunday that the CBI's credit cards scheme has been suspended even before it was fully launched.

“I think it is not possible to issue credit cards at the moment due to lack of proper infrastructure,” Mohammad Reza Diani was quoted as saying by ISNA.

People have lost hope in being able to benefit from the planned lending facilities, he said. “Instead of reducing the card's credit ceiling from 100 million rials ($33,000) to 60 million rials, the central bank simply canceled the scheme.”

The credit card system was a part of the government’s incentive plan unveiled in October. Up to 100 million rials credit cards were to be issued to boost consumer spending and help local manufactures at 12% interest. The plan was launched on Jan. 9 and offered to newly-married couples, government’s employees and retirees.

“I advise people not to wait for the (credit card) scheme if they want to buy home appliances because prices have hit rock bottom,” Diani said.

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