Instructions for providing supply chain financing services were announced

According to the monetary financial news, in accordance with the above-mentioned instructions, the Central Bank of the Islamic Republic of Iran in line with its mission of formulating and implementing the country’s monetary and credit policy and supervising banks and credit institutions and with the aim of increasing the efficiency of credit policies and balancing the banks’ balance sheets. Improving the health indicators of the banking network has put the approach of improving working capital financing methods on the agenda.

Given some of the shortcomings in the current method of working capital financing, the implementation of a chain financing system, as a successful experience in other countries, can be considered an effective and efficient solution.

Chain financing is a set of financing methods and operations that leads to improved working capital management of manufacturing firms. In this method, instead of the traditional way of receiving direct facilities by economic enterprises, the financing process of enterprises is continuous and along the supply chains and based on the actual flow of goods and services.

In this method, it is possible to use a variety of methods such as discounting receivables, buying debt, agency, reverse agency, payment of facilities and securities of receivables to finance working capital of companies, which will reduce the need for new facilities.

According to the communiqué, banks and credit institutions, while providing the necessary requirements and infrastructure, are required to identify the risk level of each of the business models related to chain financing and take the necessary measures to manage and reduce the risk. Due to the variety of methods and tools used in chain financing, the following executive procedures will be communicated as required.

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