50% of all bank facilities became transparent

“Transparency of facilities and obligations of large banks and related parties” became a law for the first time in this year’s budget, and its implementation has clarified the situation of about 2000 billion tomans, equivalent to 50% of the total banking facilities, to the public.

The publication of this information, in addition to creating the possibility of “public and public supervision” of banks’ facilitation, provides the basis for “accelerating the elimination of rent and corruption” and “guiding bank credits” and is considered an unprecedented development in banking supervision.

What does the law say?

In a progressive legal clause in the budget of 1401, the Islamic Council obliged the banking network to clarify the details of the facilities and commitments of macro and related parties.

In this paragraph of the law, which was approved in note 16 of this year’s budget law, it is stated:

1- The central bank is obliged to use its information system and the information received from banks and credit institutions, the amount of payment and the balance of the facilities and obligations of large and related parties and the amount of payment of each one by the beneficiaries of the unit, the interest rate, the repayment period, the period Respiration, repayment status (current, past due, deferred or doubtful), type and amount of collateral received, should be posted on the website of the central bank.

2- Banks and credit institutions are required to provide the above information to the Central Bank on a quarterly basis. In case of refusal to send the information, the credit institution will be sentenced to one of the crimes listed in the monetary and banking laws of the country at the discretion of the Central Bank. The central bank is obliged to submit quarterly reports on the cooperation or violation of banks and credit institutions to the 90th principle commission of the Islamic Parliament and the Audit Court.

With the implementation of this progressive law by the central bank, for the first time, the information of a significant part of large facilities and related parties of banks was released to the general public in order to provide the basis for public supervision. To date, 31 banks and credit institutions have made their facilities and macro commitments transparent, which includes significant and ponderable data; However, these banks and institutions have not fully fulfilled their legal obligations in this field, and according to experts, a significant part of the facilities and obligations of the macro and their related parties have not been clarified.

At the same time, the central bank showed that the government has a firm determination to fulfill the motto of transparency and fight against corruption by implementing this law quickly. In fact, with the proper cooperation between the parliament and the government in drafting and implementing this law, they provided the ground for public supervision in the banking system, which is unprecedented in its kind.

50% of all bank facilities became transparent

According to the latest information published by the Central Bank, the total balance of banking network facilities at the end of September 1401 was equivalent to 4000 thousand billion Tomans. Of this amount, 1,760,000 billion tomans are related to large facilities and another 200,000 billion tomans are related to facilities and obligations of related parties, which have been made clear through Note 16, and the details of which are available to the public, experts and media for the first time in the country. is placed

Therefore, with the transparency of macro facilities and related parties and subsequently access to the information of 27 banks with macro facilities and related parties, about 50% of the total balance of banking network facilities has become transparent. Investigations show that out of the total of 1760 thousand billion tomans of large facilities issued, more than 606 thousand billion tomans, equivalent to 30%, are allocated to 25 items of facilities above 10 thousand billion tomans.

The logic of transparency of banking facilities: Money creation is a public right

According to the modern monetary theory, banks increase the country’s liquidity through lending and so-called create money. If this creation of money and the increase in liquidity, whose power has been given to the banks by the permission of the government, is used in the right direction, it will lead to economic growth and the enlargement of the economic pie; Otherwise, the few people who have access to large facilities may benefit, but it leads to stagnation and inflation, which people have to pay for by increasing the cost of living.

Therefore, the creation of money is a public right and it needs public supervision when the supervisory authority has not been able to properly supervise it and has found many deviations.

Among the deviations of bank money creation, we can mention the unregulated lending of facilities by banks for capitalization or the facilities that are given to non-productive natural and legal entities. For example, the payment of large facilities more than 6 times the legal ceiling, the payment of facilities to related parties more than 100 times the legal ceiling, and 40 times violations in granting facilities for the construction of Iranmal, are among the violations of Aindeh Bank, whose accumulated losses are more than 90 thousand A billion tomans has been reached.

Capital Bank also owes more than 25 thousand billion Tomans to the Central Bank due to its very unfavorable performance in providing facilities, most of which were granted to related parties, and has accumulated losses of more than 40 thousand billion Tomans. And it has the worst performance among all the country’s banks in the “accumulated loss to base capital ratio” index.

2 important effect of transparency of banking facilities

Dissemination of information on facilities and commitments of banks and related parties has led to the transparency of about 50% of all banks’ facilities, and in the least possible way, it makes it possible to review and analyze the quality of facilities for experts, and finally, the quality of policy and decision-making in the country. to improve

In addition to this, publishing this information and creating the possibility of “public and popular supervision” over bank lending is an unprecedented development in banking supervision and has two very important effects. “Prompt prevention of rent and corruption in the payment of bank facilities” through the publication and public supervision of it, which makes it possible to prevent the creation of unregulated, rent-oriented and in some cases corrupt money by banks immediately, not with a delay of several years, as well as providing the opportunity “Directing bank credits” towards productive activities and major development plans of the country are two important effects of the progressive law of the parliament, which the continuation of its implementation by the central bank will bring to the country.