The vice-governor of the Central Bank of Iran says although re-establishing banking links with major global banks is a time-consuming process, the government will nonetheless push to revive ties with big international lenders in the shortest time possible.
“Expanding correspondent banking relations is one of the key components of reforming the banking system,” Akbar Komijani said on the sidelines of an event to introduce the new head of the Securities and Exchange Organization.
He added that ever since the agreement between Iran and the six world powers was clinched, some level of domestic “resistance” has formed around the deal because “old habits die hard and charting a new course takes time”, reports ISNA.
But now that the hurdles have been removed and restrictions are eased “we are witnessing more positive changes in the country’s banking conditions.”
Small and big banks have “reestablished links with us and we are now looking to bigger banks to do business.”
After international sanctions over Iran’s nuclear program were lifted in January, the world’s big banks have continued to stay away fearing falling foul of the residual US sanctions. This has slowed Iran’s efforts to rebuild its foreign trade and investment.
Banking Reforms
Noting that the government has been trying to reform the banking system for the past year, CBI’s second-in-command billed “reforming the capital market and organizing government debts” among the most important sections of reshaping the beleaguered banking sector, saying that under the umbrella of the banking overhaul plan, these operations “have undergone expert analysis and have been subsequently approved and communicated by the president.”
The Banking Overhaul Plan, seen as a milestone in reforming the beleaguered banking sector was signed into law by President Hassan Rouhani in July. The plan which had been in the making for a year, seeks to tackle the most pressing issues facing sick banks.
Among other things, it seeks to get financing for short and medium-term projects back on track, provide a cash cushion to tackle the mountain of bad loans, promote competition, reorder the money market by regulating the army of uncertified credit and financial institutions, and increase banks’ lending power by raising capital.
The Ministry of Economy, the CBI and the Management and Planning Organization are the three government entities tasked with the responsibility of the banking overhaul plan.
Komijani stated that the country’s economy has gained from lower transportation costs and an easier access to hard currency, a trend he hoped would continue, “so we can use our foreign exchange resources where it most benefits the economy.”
