Bank Saderat Iran has announced that the government’s new auto loan scheme would help settle car manufacturers’ debts to the banking sector and would not have any inflationary effects.
“The 250 million rial ($8,300) loans per car not only would not stoke inflation but will help the flow of liquidity into manufacturing ,” ISNA quoted Ismaeil Lalegani, the bank’s CEO as saying on Wednesday.
He referred to the carmakers’ mountain of debts to banks and said the loan scheme would help reduce debts of manufacturers but added that 80% of the revenues generated from loans would be paid to automakers.
“There would be no increase in liquidity and apparently no addition inflation is expected.”
The cooperation of banks in the car loan scheme was in line with their responsibility to help promote the national economy because such schemes help reduce bad debts,” Lalegani added.
He considered the 16% interest on the car loans as low.
The government unveiled the auto loan scheme this month to help the struggling carmakers shed their huge inventories in the troubling times of recession and declining consumer spending.
The car loan ceiling is 250 million rials ($7200 at market exchange rate) at 16%-18% and payback period of maximum seven years.
The plan stipulated that no more than 110,000 loans would be available and should meet 80% of the price of domestically-made cars. In less than six days 110,000 cars were sold.
Embroiled in Controversy
But as the new buyers are waiting for the cars to be delivered, carmakers are demanding credit from CBI before handing over the vehicles.
Reza Taghizadeh, a sales deputy at Saipa, the second largest carmaker in Iran, said on Tuesday that cars sold under the new loan scheme will not be delivered until the paperwork is complete, a matter which depends on how soon the Central Bank of Iran manages to provide the credit.
He said the cars must be delivered within a month from the time the CBI provides the carmakers with the promised credit.
But a CBI official struck back by saying that the automakers “must respect the dates mentioned in the contracts and make deliveries accordingly.”
Mohammad Reza Ghorbani, head of CBI credit office, added that there had “never been any talk of the CBI directly providing the automakers with any credit,” ISNA reported.
The CBI was to provide the credits for a maximum of 110,000 vehicles and will do so as promised, the banks will not have to provide that amount from other sources, he was quoted as saying.
