Most Important Points for Removing Problems
Ali Ashraf Afkhami, Chairman of the Board of Directors and Managing Director
of Bank of Industry and Mine (BIM) has emphasized the need for developing
discipline in financial enterprises. He said the question of transparency,
accountability of economic enterprises, risk management, paying attention to
validation and most importantly observation of financial discipline are
among the most important macro policies of the banking system in the country
which should be taken into consideration and finally direct the banking
system towards capital adequacy.
The two-day 27th annual conference on monetary and foreign exchange policies
with orientation on financial stability, background for sustainable economic
growth, was held on July 1 at the International Convention Center of the
IRIB. The BIM chief participated in the gathering and delivered a speech on
analysis of the behavior of balance sheet of the banking system in creating
liquidity and its impact on the macro economy.
Stating that problems existing in our economy and the banking system also
exist in other countries, Afkhami noted that the imbalance that is referred
to in the banking system is not merely confined to Iran but that other
countries too are basically encountered with such an imbalance.
He added that in other countries such as Italy, Greece, etc. we are
witnessing a similar situation. In all countries, the legislators and the
central banks make their regulatory rules stricter. By the same token in
other countries the issue of Basel III has been discussed and the banks have
been given a deadline up to 2019 to comply with the framework. While
implementation of Basel III has not been completed yet, the draft Basel IV
is getting prepared and all these cases show that the situation of the
banking system is not favorable on the whole.
Afkhami reminded that apparently the most important question mark today is
management of frozen assets, an issue which is widespread in the banking
system. He said it should be checked why this phenomenon takes place and
grows day by day.
He further remarked that banks’ failure to observe reasonable interest rates
and their competition to attract more deposits are among the obstacles that
exist on the way of financial discipline of the banking system and creation
of frozen assets.
On the other hand, he said, the important point is that we should improve
the capacity of financial and economic enterprises of the country in
international arena and also create appropriate capacities for the presence
in international markets rather than restricting activities of the Iranian
banks to 80 million Iranians.
As for the condition of non-oil exports, Afkhami said the value of non-oil
exports last year stood at about $44 billion while countries with much
smaller span and less populated had five to six times more than our non-oil
exports. Therefore, through increasing exports and growing non-oil exports
we should increase the volume of our banking transactions.
The BIM chief while stressing that failure in loan repayment is one of the
obstacles on the way of the banking system, noted that unfortunately when
facilities are offered no appropriate validation is made and in case of
finding the roots we can realize that those who are not capable of paying
back the loans were not qualified for receiving the facilities at that
he said that discussion of transparency, accountability of economic
enterprises, risk management, paying attention to validation and most
importantly observation of financial discipline are among the most important
macro policies of the banking system of the country which should be taken
into account and direct the banking system towards capital adequacy.