The money growth of stock exchange banks decreased by 81%

According to the report of Iran Economist, after the establishment and formation of private banking in Iran and the development of electronic exchanges, the money multiplier in Iran’s economy went on an upward trend so that it reached the number 8 since 1400, which means that every rial that central bank It injects into the economy, it increases 8 times in the banking system, so controlling the growth of banks’ money creation and managing the balance sheet has become very important.

In this regard, since November of last year, the rules for controlling some balance sheets of banks were implemented and in this regard, banks were separated into two commercial and specialized categories. According to the rules approved on March 27, 2019, commercial banks will be able to grow their balance sheets by 2 percent every month. This range was set at 2.5% per month for specialized banks.

This process continued until this August, the central bank announced new criteria for the growth of banks’ balance sheets, which changed to 1.33% to 2.5% based on the growth of banks’ scope every month. Determining the monthly growth of the bank in this domain based on 7 indicators, the rating score of the bank/credit institution based on the CAMELS method; capital adequacy ratio; interbank market situation; overdraft status; The status of non-current Rial claims; the status of compliance with anti-money laundering directives; Professional judgment of the state of the bank/credit institution from the perspective of the inspection group within the framework of relevant rules and regulations (observance of the interest rate of deposits and facilities, macro, related, investments and transparency), will be the criterion for determining the growth of the bank’s domain every month.

* Determining the balance sheet growth ceiling is not the same as determining the lending growth ceiling

In the implementation of some bank balance sheet control rules, the central bank targeted the right side of the balance sheet. Right balance includes cash balance, receivables from banks and other credit institutions, granted facilities, investment in shares and other securities, receivables from subsidiaries and affiliates, accounts receivable, tangible fixed assets, assets invisible and other assets.

Based on these rules, assets such as deposits with the central bank, cash balances and government bonds were excluded from the balance sheet growth. That is, the growth and change of these asset components are not considered in the growth calculations of the bank’s balance sheet.

Therefore, when the central bank sets a monthly growth ceiling of, for example, 2% for a bank, it does not mean that only 2% growth is allowed per month, but the included components on the right side must have a maximum growth of 2% per month. . Besides, the bank can convert part of its assets into cash sources. that turn into a facility. Therefore, it is possible for a bank to have a 40% increase in its loan balance in one year, but it has also met the limits of balance sheet growth.

But finally, according to the situation of each bank, determining the limits of balance sheet growth has an effect on the growth of the balance of the facilities granted by banks and can manage it.

* Reduction in the growth of lending by 12 stock exchange banks from 54% in the first 6 months of last year to 10% in the 6 months of this year.

Surveys show that in the first 6 months of this year, the growth of the balance of the facilities granted by banks has gone through a significant downward trend almost simultaneously with the growth of deposits. The growth of Bank Mellat’s facility balance has decreased from 39.6% to 9.07% in the first 6 months of this year. Also, Tejarat Bank from 25.8% to 19.1%, Bank D from 12.1% to negative 3.1%, Saderat Bank from 25.7% to 7.2%, Parsian Bank from 18.6% to 5.6%, Sina Bank From 42.5 Percentage to 13.2%, Pasargad from 28% to 22.3%, Ekhtaz Novin Bank from 33.7% to 7.8%, and Karabhan from 21.9% to 2.3%.

Of course, in some banks, the changes in the growth of the loan balance have been small and even increased. For example, the growth of Post Bank’s facility balance was 11.4% in the first 6 months of last year, but it increased to 30.6% in the first 6 months of this year.

In total, these 12 stock exchange banks had a 54% growth in the balance of granted facilities in the first 6 months of last year, but this ratio has decreased to 10.04% in the first 6 months of this year. Of course, in calculating the growth of facilities in the first 6 months of 1400, there is no Saman Bank information.

Therefore, the growth of banks’ money creation in the first 6 months of this year has decreased by 81.5% compared to the growth of banks’ money creation in the first 6 months of last year.

* Halving of the “residual” growth of granted facilities despite the 49% growth of paid facilities

In the first 6 months of last year, all the country’s banks recorded a 23.7% growth in lending, but in the first 6 months of 2011, this percentage growth has decreased to 12.08%.

According to the statistics of the Central Bank, in the first 6 months of this year, the entire banking network has paid 1954 thousand billion Tomans in facilities, which has grown by 49% compared to the same period last year. Also, according to the statistics obtained from 11 stock exchange banks, they have paid about 302 thousand billion tomans in facilities in October this year. Therefore, the flow of facility payments has not been stopped.

But on the other hand, some banks, due to exceeding the conditions and limits set by the central bank, have notified their branches not to pay some facilities in order not to be subject to the penalty of increasing the legal deposit rate. For example, in recent weeks, some banks have stopped paying micro-facilities.

* Is the performance of banks expansionary or contractionary?

According to Fars report, the inflation rate at the end of September this year was 39.5% according to the report of the Central Bank and 42% according to the report of the Statistical Center of Iran, and for this reason, some experts and monetary specialists believe that the reduction in the growth of the balance of the facilities granted by banks with the current level of inflation should be more than the current rate. However, on the other hand, the central bank managers believe that the growth of banks’ lending is appropriate and the central bank has prevented the unregulated growth beyond the banks’ ability, because in the past years, some banks gave credit without observing the capital adequacy ratio, their liquidity status, and observing the beneficiary of the creation unit. On the one hand, these measures would increase inflation, and on the other hand, it would aggravate the dissatisfaction of unhealthy banks.

It seems that more than the central bank’s monetary policies have affected the reduction in the growth of banks’ money creation, the application of disciplinary and regulatory policies and the observance of standards have reduced the growth of banks’ payment facility balances, which is a very important and noteworthy event from this point of view, because for years the bank The central bank did not contribute to the growth of the banks’ balance sheets and the composition and implementation of the banks’ assets, and no limits were applied to the growth of the banks’ money creation, and this caused significant growth in the banks’ assets and the formation of unhealthy and toxic assets. Therefore, it cannot be said that the decrease in banks’ money creation is only due to monetary policy.

It is necessary for the central bank to make a proper clarification about the developments of recent weeks and its developments, so that the ambiguities in this area can be resolved and expert criticism and more precise policy proposals can be provided.

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