Financial Times, Tehran, November 4 2008( excerpts) – Iran’s banks may have escaped the global financial crisis, largely because of their international isolation, but they are suffering from a different kind of credit crunch.
Squeezed between the populist policies of President Mahmoud Ahmadi-Nejad and international financial sanctions over Iran’s nuclear programme, the country’s 17 state and private banks are struggling with credit shortages that have brought them close to insolvency.
The largest banks – Melli, Saderat and Sepath – have been hit with UN and US sanctions over the past two years, over alleged links with Iran’s nuclear and missile programmes.
When he was appointed central bank governor in September last year, Tahmasb Mazaheri adopted measures to curb bank lending to small projects that arguably had no economic feasibility.
Mr Mazaheri claimed the government had miscalculated the banks’ lending capacity. About 40 per cent of loans given out ostensibly for projects designed to create jobs had “deviated” from their goal. The government put the figure at just 4 per cent.