Iran Bankers Voice Support for Rouhani’s Agenda

EghtesadOnline: Chief executives of state-run banks have pledged their support for President Hassan Rouhani and his economic vision for the country, as he is basking in a landslide reelection victory on May 19.

News ID: ۷۷۶۵۱۱

27 May 2017

In a letter to Rouhani signed by members of the Coordination Council of Banks, the CEOs congratulated him on his triumph and emphasized the importance of services provided by the banking system, particularly state-owned lenders.

"[Public-sector] banks carry the main weight of financing the production and housing sectors and fund industrial, mining and infrastructure projects," the letter was cited as saying by Banker.ir.

In their letter, the bankers also refer to "non-stop work" of bank executives and staff to ensure the continuity of production and generating jobs, according to Financial Tribune.

The missive refers to the participation of the banking system in providing working capital for production units and pulling them out of stagnancy caused by years of financial drought.

As confirmed by the Central Bank of Iran Governor Valiollah Seif two weeks ago, 25,000 small- and medium-sized enterprises have received175 trillion rials ($4.6 billion) worth of loans which, according to him, "not only protected the current jobs, but also generated new employment".

Supporting the ailing SMEs was one of the few areas in which the CBI not only fulfilled its promises, but exceeded them as it had initially earmarked 160 trillion rials ($4.2 billion) in loans for them.

The CEOs' letter celebrated the "great achievement of the government's diplomacy" that led to the signing and implementation of the nuclear deal, or the Joint Comprehensive Plan of Action, which allowed the Iranian banks to renew their dealings and transactions with their international counterparts after years of isolation.

Nuclear Deal's Benefits

The nuclear deal allowed the banks to "conform their operating systems to global standards and make up for lost time during the sanctions" and helped Iranian banks establish more than 500 correspondent relations with their international peers.

It also enabled them to engage in "opening letters of credit for businesses through SWIFT with a least amount of cost".

The Society for Worldwide Interbank Financial Telecommunications code is an internationally-recognized identification code for banks engaging in international wire transfers, the lack of which during the sanctions had significantly increased the costs of doing business for Iranian banks.

The chief executives concluded their letter by wishing success to the Rouahni administration while stressing the necessity of increasing the capital of banks and strengthening their loan allocation capacity.

"We pledge the full readiness of the banking system for a more effective collaboration in line with continued services and a successful implementation of the government's economic plans for years to come," the letter said.

Officials and pundits have noted that the Iranian economy is heavily reliant on banks, hence supporting state-owned lenders through capital increase has been a flagship agenda of the administration.

In a Cabinet meeting in early January, ministers obliged the Ministry of Economic Affairs and Finance to allocate 200 trillion rials ($5.2 billion) of excess funds to increase the government's capital in state-owned banks, which policy has already been implemented by eight lenders.