70458
President Hassan Rouhani addresses the parliament on Aug. 15.
President Hassan Rouhani addresses the parliament on Aug. 15.

Banking Reforms Get a Second Wind

Banking Reforms Get a Second Wind

The Iranian banking system has been combating a variety of serious problems such as a crippling credit crunch, sky-high non-performing loans and a lower share of the money market caused by the activities of shadow banks.
In his address to the parliament in defense of his ministerial nominees, President Hassan Rouhani renewed his promise to pursue reforms in the banking sector during his second term and vowed to reduce the heavy burden of financing shouldered by the banks.
"Weak banking supervision, expansion of illegal credit institutions, improper monetary policymaking, financing the government through the banking system, false boom in the housing sector, moving a portion of the assets held by the banks to this sector and unregulated speculative activities of banks in the past decades have all created a plethora of problems in the banking system," he said.
Rouhani noted that the piling up of these problems throughout the years has now shown itself in the form of high bank interest rates and a suppressed loan allocation capacity of lenders, Dolat.ir, the official news outlet of the administration, reported.
The president stressed that the government's view that the banking system must finance its projects and schemes must change.
"In line with this goal, the government will balance its budget," he said.
However, "policymaking in the parliament and other governing bodies must be in a way that the burden of financing the government, municipalities and other entities' budget deficits does not befall the banks", he added.
As part of the overarching plan to reform the banking sector, which will be followed by the 12th administration "with utmost seriousness", Rouhani said the government and the Central Bank of Iran wish to establish a rating system for banks and credit institutions, and are pursuing the plan to increase the capital of state-owned banks.
Since a significant portion of new jobs are created by small- and medium-sized enterprises, and in light of the fact that job creation is high on the administration's agenda, "financing the bigger businesses and enterprises will be shifted to the capital market from the banking system" for the banks to be able to support the SMEs more expansively, he said.
The president referred to "major reforms in the government's budget, retirement funds, banking system, climate of doing business" as the focal points of the administration's reform plans.
On job creation, Rouhani said because of "special conditions in the jobs market", in addition to endeavoring to increase economic growth "which is the most important path to create sustained and revenue generating jobs", his administration will engage in active policies.
These policies will prioritize distressed provinces and those with higher than average unemployment rates and will entail internship schemes to incentivize businesses to attract university graduates by reducing training costs.
"What's more, in line with reducing the cost of businesses in training a young workforce, the government will implement an insurance exemption scheme for employers", which will relieve them from paying social security insurance premiums.
The president defended Masoud Karbasian, his pick for administering the Ministry of Economic Affairs and Finance, by referring to his three decades of experience in many ministries and economic sectors.
He added that he expects Karbasian to "strictly implement" regulations of combating money laundering and organized corruption, actively collaborate in reforming the banking sector to improve production and employment, slash redundant regulations to improve the climate of doing business and empower financial discipline.
Rouhani called on the ministry and its nominee to expand the use of technology in fighting corruption, increase the share of insurance and its effectiveness in the economy, set the course of government's divesting schemes straight and actively participate in attracting foreign finance and developing exports.

Short URL : https://goo.gl/SjeKsX
  1. https://goo.gl/RxCzfn
  • https://goo.gl/fGTNz8
  • https://goo.gl/Q6GD3g
  • https://goo.gl/XDnK2h
  • https://goo.gl/9HWbn2

You can also read ...

Iran Signs €500 Million Finance Deal with Denmark
Denmark's Danske Bank signed a €500 million finance contract  ...
Iran, Austria Banks Finalize €1 Billion Finance Deal
Austria's Oberbank signed a finance deal worth €1 billion with...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus