Economy, Domestic Economy

Access to NDFI Loans Eased

Access to NDFI Loans EasedAccess to NDFI Loans Eased

As a usual practice, in the recent 2015-16 budget bill presented to the parliament for review and approval, the administration has dedicated a section (Note 5) to National Development Fund of Iran (NDFI) resources, but this time the focus has been shifted towards easing the access to the loans NDFI would provide for the manufacturing sector.

According to an analysis appeared in the Donyay-e Eghtesad this week, in the past, NDFI loan applicants had to first obtain approval from the ministry of industry, mine and trade and secondly from NDFI on the feasibility of their proposals and then they could join the long queue of loan seekers. It was never clear whether they could obtain the loans.

In the new budget bill, however, NDFI has been allowed to deposit 20 percent of the incoming revenue in the period March 21, 2015 – March 20, 2016 with the commercial banks. Ten percent should be dedicated to industry, mines, transportation and tourism sectors, and 10 percent to water, agriculture and environment projects. If implemented, the new procedure will save loan applicants much time.  Furthermore, they do not need any more to go through the first two stages.

According to Arman Khaleghi, board member of the House of Industry, Mines and Trade, a large part of the loans provided by NDFI during the last year did not reach the manufacturing units.

In the past, NDFI financial resources, saved in rial, were injected as cash flow to projects with high physical progress. In 2013, out of the 5,500 projects applying for the loans, 4,000 were approved. But only 300 managed to obtain the loans, according to Khaleghi.  

  NDFI Resources for Next Year

According to Note 5 of the proposed budget bill, NDFI resources are to be utilized in a variety of development activities. For instance, Industrial Development and Renovation Organization of Iran (IDRO) and Iranian Mines and Mining Industrial Development and Renovation Organization (IMIDRO) and Iran Small Industries and Industrial Parks Organization (ISIPO) have been allowed to collaborate with private sector and cooperatives as legal person and hold up to 49 percent share in projects aimed at developing deprived and less developed regions in the country.

In another section, the administration has been given the authority to allocate $200 billion to Export Guarantee Fund of Iran and another $100 billion equally to those funds that support electronic industries, mining activities, maritime industry and small investments.

Under the proposed provisions, NDFI will also allocate foreign currency loans to investors from private sector or cooperatives involved in upstream oil and gas industries with a focus on joint oil and gas fields without ownership transfer of minerals. In addition, NDFI is allowed to grant loans both in foreign currency and rial to the investors nominated by the ministry of road and urban development, involved in various transportation development projects.

NDFI is also envisaged to support the Iranian contractors that succeed to win foreign tenders or companies being able to export goods together with technical-engineering services by depositing up to $3 billion in the destination countries for issuing guarantee letters, equipping workshops and cash for advance payments.

Imam Khoemini Relief Foundation and Rehabilitation Organizations have also been introduced to grant loans out of NDFI resources to job-creation and SME development projects.