CBI’s Six-Point Roadmap on Foreign Finance Projects
[Window Title] Network Error [Main Instruction] Windows cannot access \\1-FT-06 [Content] Check the spelling of the name. Otherwise, there might be a problem with your network. To try to identify and resolve network problems, click Diagnose. [V] See de
Economy, Business And Markets

CBI’s Six-Point Roadmap on Foreign Finance Projects

In his latest directive to the chief executives of banks, Governor of the Central Bank of Iran Valiollah Seif has laid down guidelines on how to spend any absorbed foreign finance to optimally boost national growth.
Owing to the significance of foreign finance for the Iranian economy, in his missive which contains six points, Seif directs the CEOs to focus on profitability and return of investment while paying attention to planning and forethought.
“As you are very well aware, one of the main goals of the banking system is to help the growth and development of national economy, and finance construction and production projects through local and foreign resources,” Seif  wrote in the directive reported by the official news website of CBI.
To achieve an 8% GDP growth rate earmarked as part of the Sixth Five-Year Development Plan (2017-22), he adds, $20 billion in foreign finance have been considered.
In line with this goal, officials have been hard at work to reestablish foreign credit lines and accept foreign finance while “we are now witnessing that foreign finance deals are struck with international banks”.
The latest and biggest foreign finance deal was finalized last month with South Korea whose Korea Export-Import Bank (Kexim) is to provide €8 billion to finance Iranian projects while the Korea Trade Insurance Corporation (K-Sure) is to insure up to €5 billion of risks for Korean businessmen working in Iran.
But more recently, the head of the Organization for Investment, Economic and Technical Assistance of Iran announced that foreign finance deals worth about $30 billion will be clinched soon.
“Deals worth $29-30 billion will be signed with four European countries and an Asian country by next month,” Mohammad Khazaei also said at the 28th Annual Islamic Banking Conference held in Tehran on August 29.
On the other hand, while a more realistic target of $20 billion in foreign finance has been earmarked in the nation’s development plan, as the head of the Tehran Chamber of Commerce, Industries, Mines and Agriculture said in a private sector meeting on Monday, the country “needs to absorb $50 billion in foreign finance a year”.
The CBI governor in his directive to bank CEOs stresses that to improve the risk rating of the country, “the attracted foreign funds must strictly be used to finance projects whose technical, financial and economic evaluations have been completed and whose profitability and ability in returning the loans on time has been approved by the agent bank”.
Seif noted that projects, whose ability to pay back the foreign loans by the time of their maturity is in doubt, should not be able to use the funds.
“It is mandatory that before signing foreign finance deals, [agent banks] make assurances that all the necessary internal permits have been obtained and the projects adhere to regulations on maximizing productive capabilities,” he said.
As his third point, Seif stresses that a strict and sustained supervision over the implementation of projects that use foreign finances is obligatory and banks must adopt timely disciplinary measures should they see any deviation in the allocation of funds.
In this regard, he adds, “banks must draft cyclical reports on the physical progression and the implementation process of the projects” without specifying a timeline.
To fully manage and execute the contents of foreign finance deals, the CBI governor directs the chief executives to come up with detailed operational plans and choose an expert and efficient workforce.
In cases where employers, contractors or other related persons are obligated to make commitments regarding the projects and their implementation based on the foreign finance deals, “banks are legally bound to write down the specific conditions in the deals signed with customers and exert precise oversight”.
In line with this, the central bank chief calls on the banks to draft their deals in a way that will give them enough authority to make the other end of the deal stick to its commitments.
As his last point, Seif notes that “it is mandatory to receive necessary and sufficient collaterals from the applicants of foreign finances” because should they find themselves unable to provide the rial or foreign exchange amounts at the time of the deal’s maturity, “it would undermine the banks’ commitments to repay the installments of the received loans on time”.


Short URL : https://goo.gl/RUvNdJ
  1. https://goo.gl/gPqxet
  • https://goo.gl/mv7G8Q
  • https://goo.gl/dGn44M
  • https://goo.gl/gMv4pf
  • https://goo.gl/S7ZSFj

You can also read ...

Valiollah Seif
Governor of the Central Bank of Iran said on Wednesday anti-...
Nat’l Virtual Currency in the Offing
Months after the idea was first publicized, it seems that Iran...
5th Indian Wheat Cargo Arrives for Afghanistan in Chabahar
India’s fifth consignment of wheat to be sent to Afghanistan...
Presale Crosses  96,000 Gold Coins
The presale of Bahar Azadi gold coins priced at 14 million...
Spanish Foreign Minister Alfonso Dastis met with President Hassan Rouhani on Feb, 21.
Foreign ministers of the Netherlands and Spain are in Tehran...
Lexus’ New Crossover to Break Cover  in March
Lexus will pull the covers off of the production version of...
The government has required car importers to pay the higher tariffs announced in January.
The government has finally allowed the clearance of imported...
Bank Loans Top $100b in 10 Months
Banks and credit institutions doled out more than 4.62...

Add new comment

Read our comment policy before posting your viewpoints