Tampering with the central bank’s resources to prevent bankruptcy

A member of the academic faculty of the Monetary and Banking Research Institute said: For years, various governments and presidents in the Central Bank have easily overcome the destructive role of non-performing banks in the country’s economy, but it remains to be seen how much Mr. Farzin can resist the resistance in fulfilling his promise to liquidate loss-making banks. These banks are successful.
Liquidation of unprofitable banks

Recently, the central bank gave six months to non-performing banks to correct their overdrafts. According to the ultimatum of Mohammad Reza Farzin, the Governor General of the Central Bank to the banks, if they fail to resolve their dispute, he will liquidate the offending banks in the first half of 1402, and their principal shareholders will be deprived of their privileges and will fully guarantee the return of people’s deposits. .

In this regard, Kamran Nedri, an economist, in a conversation with Economy 24, said: The issue of organizing the functioning of banks and solving their dissatisfaction has long been discussed in the Central Bank and the economy of the country, but the implementation of this plan has its own consequences, therefore, doing such a thing is always It is postponed. Now, with Mr. Farzin’s emphasis on doing such work, it is hoped that the central bank will be able to resolve these disagreements in the new period and with the powers it has acquired.

Nederi said: The procedure of paying the debts of the banks by the central bank has become a normal method between the banks and the central bank, and it continues until today, so that the losses of the banks’ bankruptcy are always borne by the central bank.

This banking expert pointed out that the central bank should have made a proper and informed decision much earlier than this regarding the liquidation of non-performing banks or the continuation of these banks’ activities and payment of their debts, and said: In both cases, the action of the central bank (liquidation of unprofitable banks and or paying the debts of these banks by creating money) we must wait for the effects and consequences of inflation in the country; This is despite the fact that nowhere in the world does the central bank come under the burden of guaranteeing the payment of the banks’ debt, and the loss of this problem is borne by the unprofitable banks themselves, and the only government assistance to these types of banks, before bankruptcy, is to apply the tax system in order to reduce the aggravation. The effects of inflation in the economy of that country.

According to a member of the academic faculty of the Monetary and Banking Research Institute, declaring bankruptcy is the last step that should be taken by these banks, but this is not the case in Iran, and insolvent and bankrupt banks resort to the Central Bank’s resources to maintain their status.

Nederi clarified: But the central bank’s stand to clarify the performance of unprofitable banks and not allowing these banks to withdraw from the central bank’s resources is a late but more effective action than the continued operation of these banks in the country’s inflationary environment.

Emphasizing the inflationary situation of these banks, this economist said: According to the time announced, the central bank will publish information about the non-compliance of delinquent banks in the next few months, which is a very good step in its own right. Of course, this action has been demanded from the central bank by experts and experts for years, but unfortunately, this action was never implemented with strictness.

Liquidation of unprofitable banks

This expert on banking issues continued: Determining the tasks of the banks in the same period of six months will create the basis for transparency. Of course, if this matter is realized in the appointed time!

Nederi clarified: If the central bank does not clarify the situation of these banks according to the commitment it has given, it will still have to print money and provide it to these banks to settle the debts, which is definitely impossible for the Iranian economy to continue such a procedure.