Tehran, May 25, IRNA � The minister of economic affairs and finance on Saturday emphasized the �sensitive role� banks have played in the country�s dealings with foreign nations, saying that despite structural problems and misguided policies that increased the country�s reliance on oil revenues in the past decade, the banking system has �fought the good fight of faith�.

Ali Tayebnia said in a meeting with Bank Tejarat executives that �adversaries, knowing about our increasing addiction to oil revenues, exploited this vulnerability and delivered heavy blows to the economy by imposing unprecedented sanctions,� IRNA reported. �The oil industry as the main source of income and the banking system as the main conduit for transactions were hardest hit by enemies.�

He said that adversaries intended to wreck the Iranian economy but the efficient coordination of the three branches as well as the resumption of taking expert views, minimized the multiple crises and put the economy back on track.

The minister brought as evidence reducing the 40% inflation to 15% as the hallmark of the recovery that achieved a 3% growth last year. There has been the least dependence on or manipulation of bank resources since the Rouhani administration assumed office in 2013, he added.

Toxic Debts

Tayebnia touched upon the issue of non-performing loans (NPLs), saying bad debts were one major reason for banks� inability to provide enough loans to businesses.

He said: �Since banks are the most crucial institutions for sponsoring business projects, much criticism has been directed against them for failing to meet that duty, while the true problem facing the banks is never really addressed�.

The minister urged banks to reclaim their debts and hailed Bank Tejarat for making good achievements in this regard by having recovered $1.2 billion in NPLs so far. He also called for a tough line to be taken against top debtors to the banking system who dodge their responsibilities in repaying their loans.

�Those who have managed to wangle loans for other purposes other than what they purported should be brought to justice, and instead we should shore up support for the manufacturers who really need lending to save their businesses�, Tayebnia urged.

�Some of top debtors had no desire to repay their loans in the first place, even before the recession hit the economy,� he maintained, adding that since lending rates have been higher than the inflation rate, these debtors have somehow been subsidized by the banking system all the while.

Remedial Measures

The top finance official said new efforts at the ministry of economy are underway to address the challenges facing the banking system.

Among the initiatives, the minister pointed to increasing the banks� capital, fulfilling the government�s debts to banks, making banking fees more real, and putting the banks� extra properties up for sale as the most immediate measures.

He referred to increasing the money multiplier as another important initiative, saying the money multiplier has already surged from 4% to 6%.

Transparency

Tayebnia laid especial emphasis on transparency, calling on commercial banks to conduct their business in the light of day, saying the biggest asset of every bank is its credit and the trust associated with its name.

�It is incumbent upon us to step up financial and administrative discipline in order to promote regulations. This solidifies our relationship with our customers and wins their trust,� he argued.

The minister also urged steps to ratchet up money-laundering efforts. He said things like detecting the identity of account owners, as well as tracking credit card readers can help curb money-laundering and currency crimes. (Financial Tribune Daily)

By IRNA