CBI Opposes Bank Overdrafts

The Central Bank of Iran has not forced banks to stop lending, but banks can only lend if they have enough credit since the CBI strictly opposes overdrafts from its resources, CBI’s credit manager announced.

“The result of imbalance in resources and costs will show itself in the form of overdrafts from CBI,” Ali Asghar Mirmohammad-Sadeqi was also quoted as saying by Fars News Agency.

According to a report by the central bank, the debts of banks to the central bank reached $35 billion by the end of the Iranian month of Aban [November 20, 2016].

Mirmohammad-Sadeqi noted that lenders’ resources are not sufficient to extend credits at present, which is the result of the increase in demand for cash in the final months of the Iranian year [ending March 20]. 

The Central Bank of Iran’s latest statistics show lenders paid a total of 3,825 billion rials ($99.77 billion) to various business sectors during the nine months to December 20. 

Local media have reported that banks have stopped lending. This is while Iranian banks usually cut back on lending during the final months of the fiscal year.