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EghtesadOnline: Following mounting calls for publicly naming big defaulters, several banks published lists of some debtors on Sunday and the Central Bank of Iran said more is on the way.

Bank Melli Iran, the country’s largest state-run lender, was the first to publish a list on Saturday. Several others followed suit. 

Bank Maskan, Bank Keshavarzi and Post Bank were the three state-owned banks that published the names of loan defaulters that were in arrears worth at least 1 trillion rials ($3.7 million). 

Bank Refah Kargaran, Bank of Industry and Mine and the semi-private Tejarat Bank gave out their lists on Sunday. 

Tose'e Ta'avon Bank said there is “no deadbeat borrower in the bank whose debt exceed 1 trillion rials.” 

Earlier the Economy Minister Ehsan Khandouzi asked the CBI Governor Ali Salehabadi to oblige all banks and credit institutions to inform the public about the borrowers, the  amount of loans, reimbursed amounts, unpaid dues and the type of collateral and guarantees put up by the companies in red. 

Data must also include details about the banks’ reasons and justification for lending as well as the interest rates.

Most banks that published the names of defaulters said their lists contain only a number of defaulters and is by no means complete. In addition, in most cases, the list is confined only to the names of borrowers without mentioning the amount.

Mostafa Qamari-Vafa, head of the CBI public relations department in note on his social medial account said the regulator will soon publish a comprehensive list naming and shaming all those who took out unusually large loans and never paid back. 

“The CBI will publish the list of big defaulters in line with the comprehensive action plan to reform the banking system and improve transparency of banks.”

Qamari-Vafa added that the move is a budgetary mandate as per which the CBI is obliged to publicly reveal the list of defaulters and update it on a quarterly basis. 

In the same vein, Mahboub Sadeqi, head of CBI’s Banking Data Department expressed the hope that obliging banks to publicly disclose the names of unruly borrowers can and will help expedite recover the billions in bad debt, IRNA reported. 

CBI data show bad loans reached 2,349 trillion rials ($8.7 billion) by the end of the first half of last fiscal year on Sept. 21.

High NPLs have hurt the balance sheets of banks and forced them to suspend lending, despite the chronic need of businesses. This, coupled with other ills have put banks at the center of rising criticism by economic experts and business leaders.   

 

Flawed Policies    

Ahmad Hatami Yazd, a banking expert and former CEO of Bank Saderat Iran linked the high NPLs in part to the defective banking policies, in particular lending rates. 

In a talk with Fars News Agency, Hatami Yazd, noted that due to the huge gap between inflation and interest rates, some companies find it palatable to delay repayments. 

“Under conditions when inflation is above 40% and lending rate less than 20%, borrowing economically makes sense even if borrowers have to pay extra for late payment,” he was quoted as saying.

He criticized banks their dual standards regarding naming the big fish, saying that they still refuse to publicly expose the big offenders. 

He referred to Iran Khodro (IKCO) and SAIPA, the two main carmakers, as clear examples, saying that the two have borrowed more than 1,000 trillion rials ($3.7 billion) and almost always beg the government of bail them out.

It is worthy of mention that the two auto companies, largely owned by the government, are infamous for unbelievingly high prices, inferior quality, poor management and appalling lack of transparency. 

 

Banks Publicly Naming