Iranian Government Reduces Bank Arrears by $3.5b

EghtesadOnline: The government has cleared 132 trillion rials ($3.5 billion) of its arrears to the banking system while increasing its capital to public-sector banks by 242 trillion rials ($6.4 billion) , said the government spokesman.

News ID: ۷۷۵۲۳۴

06 April 2017

"The recapitalization of eight public-sector banks and settling arrears to the banking system were two important steps to increase the lending power of the banking system," Mohammad Baqer Nobakht was also quoted as saying by IBENA.

The spokesman said the government settled 85 trillion rials ($2.26 billion) of its debts to contractors, including 10 trillion rials ($266 million) to Mehr Housing Project, 10 trillion rials ($266 million) to the Foundation of Martyrs and Veterans Affairs and the Islamic Revolution Housing Foundation, 25 trillion rials ($666 million) to municipalities, 4 trillion rials ($106 million) to higher education and 25 trillion rials ($666 million) to the Ministry of Education.

President Hassan Rouhani on January 2017 notified a measure approved by his ministers, which decrees that the Planning and Budget Organization "is authorized to allocate a maximum of 146.2 trillion rials ($3.78 billion) from the surplus assets of the Central Bank of Iran to clear the confirmed debt of the government to agent banks", Financial Tribune reported.

According to the directive, Bank Keshavarzi (Agriculture Bank) will be reimbursed the highest volume of debt at 58 trillion rials ($1.5 billion) while the Bank of Industry and Mine will be paid the lowest amounting to 400 billion rials ($10.3 million).

Tejarat Bank at 32 trillion rials ($829 million), Bank Saderat at 25 trillion rials ($648 million), Bank Mellat at 17.2 trillion rials ($445 million), Bank Sepah at 7 trillion rials ($181.4 million), Bank Refah at 5.2 trillion rials ($134.7 million) and Bank Melli at 800 billion rials ($20.7 million) are also slated to receive the debt repayment from the government.