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Most important challenges to Iran's banking system named

Finance Materials 29 July 2019 14:26 (UTC +04:00)

Tehran, Iran, July 29

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Iran's banks are facing challenges in terms of providing advances to exporters, while the debts of clients have affected the liquidity, former head of Export Guarantee Fund of Iran, Seyed Kamal Seyed Ali told Trend.

"Massive debts of clients to banking system is the major challenge, late payment debts to the banking system have increased, therefore some banks are not able to provide new advances," he explained.

"To increase the liquidity at the banks, its necessary to either increase their capital via investors, or the clients should pay off their delayed debts. Another option for the banks - to sell their assets to increase liquidity," he said.

"Late payment debts and liquidity are the most important challenges in the country's banking system," Seyed Ali added.

"Today, there seems to be no need to raise the interest rates due to rise in savings level, so a 20-percent interest rate is a good figure," he said.

Seyed Ali went on to say that the banks should provide more advances for exports, instead of imports.

"Exporters should get more advances from banks, but due to sanctions, the situation has worsened," he said.

"The banks should issue Letter of Credit (LC) while they can obtain the money later. In this system, an exporter would receive more cash from bank advances and buyer pays the money in one or two years," he added.

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