The deputy governor for banking supervision at the Central Bank of Iran criticized recent attacks against the involvement of banks in non-banking activities, saying that the criticism has distracted attention from other violations, ISNA reported on Saturday.
Total stakes held by commercial banks in businesses is valued at 262 trillion rials ($9.7 billion), Hamid Tehranfar told ISNA, adding that the figure is insignificant compared to investments made by other entities.
“Such criticisms stem from implausible analyses of the banking system,” he said, adding that “while banks are blamed for holding large stakes in businesses, some major manufacturing and industrial companies - the so-called entrepreneurs - hold more corporate stocks and investments than those of the banks.”
If any entity is to blame for running firms, these companies are the ones to be blamed rather than commercial banks, “as they are acting more as investment companies rather than manufacturing ones,” said Tehranfar.
He said it wasn’t clear how some of these manufacturers –with such investment profiles – dared to raise criticism a few months ago, claiming that the corporate running activities of banks has damaged their businesses.
“They claimed commercial banks allocate a major portion of loans to their own firm-running activities, thus refusing to provide loans for manufacturing activities,” said Tehranfar, adding that these claims led to wide controversy last summer over the firm-running activities of the banks.
However, he said that banks are ready to sell their surplus assets to other companies, saying that the CBI had previously announced that they can share in corporate bodies by up to 40 percent, as specified by the Money and Credit Council.
Banks Coming to Terms
The CBI official went on to say that although the Money and Credit Council – a monetary policymaking body within the central bank – has assigned the banks with reducing their shares in the corporate bodies to less than 40 percent, some say the banking system is ready to reduce its share even to less than 20 percent.
However, “the current 40 percent quota makes better sense,” Tehranfar said, “since the involvement of banks in businesses has its own positive results on the one hand, while on the other, they cannot be deprived from being active in the market.”
Referring to the three-year deadline set by the CBI for commercial banks to sell their shares in the stock market, he said three years is quite a long period as they can sell 33 percent of the surplus of their stocks each year.
Some banks have already entered the stock market to sell shares, Tehranfar said, adding that the action has raised objections among stock market authorities, who claim the presence of banks in the stock market can lead to chaos.
“But the central bank is not going to stop them from selling their shares in the stock market,” as the banking system is determined to reduce its share in businesses as specified by the law, he concluded.
