Hassan Rouhani

Without reforms, #Iranian banking crisis looms

In Iran, concerns are growing that banks may be facing the fate of credit and financial institutions (CFIs) that are on the verge of collapse. The Central Bank of Iran (CBI) is under rising pressure from the parliament to immediately regulate these nonbank credit institutions, as an increasing number of depositors protest delays. Now, there are fears that banks could be next. To avoid this scenario, pundits are suggesting that the CBI be granted more autonomy by the parliament so that it will take more serious disciplinary measures. The administration of President Hassan Rouhani has been trying to pass the bill in the parliament, but certain influential bodies have blocked the legislation. The huge government debt is putting excessive pressure on the banking system, but the Iranian public still trusts banks, even as many CFIs have collapsed.

Iranian bad debt probe finds silver lining

A move by Iran to recover bad debts on behalf of banks has shed light on possible corrupt lending under the country’s previous president Mahmoud Ahmadinejad. President Hassan Rouhani’s administration, in power for nine months, says bad debt in the banking system has reached a “critical” level – 15.6 percent. The authorities this week have handed the names of 575 of the biggest defaulters to the judiciary to try and recover some of the $33 billion owed. The list has not released but some believe the bulk may have been borrowed by as few as 100 people and firms. The bad debt may hamper Rouhani’s plans to boost employment and raise living standards. However, analysts also see positives in the new openness on the debt problem and moves to fix it.

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