Tehran, Iran, July 25
Trend:
“Capital adequacy, banks investments in real estate assets and providing facilities to affiliated individuals are among the main issues challenges facing Iranian banks,” a Member of Monetary and Banking Research Institute, Tehran (MBRI) told Trend.
"Another important problem is the high interest rate that some banks paid to depositors,” added Kamran Nadri. "The returns and profits, which banks have gained from their assets in recent years, have been remarkable enough, so other banks have started to decrease the interest rates.”
"However, the Iran's banking crisis worsened after banks assets and properties have begun to increase,” he noted.
As reported, as part of its plans to reform the limping banking sector, the government has launched a program to sell excess property of state banks.
According to the Economy Minister Farhad Dejpasand, a one-year program is developed for 10 government-owned banks (including the biggest lenders) to relinquish the excess assets – mostly real estate – and increase their cash reserves. He did not name the banks.
Nadri went on to say: "At present, Iranian banks do not comply with prudential banking principles. Although these principles limit the activity of banks to a certain extent, today the banks are far behind and their investments exceed the permission of the Central Bank, so they should therefore sell their properties and assets in order to reach the CBI's points.”
“The CBI's prudential principles set limits on the granting of facilities to related parties, and some banks do not comply with these limits, as we see that too many facilities have been granted to shareholders and managers of banks and individuals associated with shareholders,” explained Nadri.
"Along with these issues, there are also problems with over-drafting by banks from the Central Bank fund,” he added.