The chaotic state of banks in Iran is one of the main causes of the country’s economic crisis. Instead of playing a supportive role in production, they have become tools serving the ruling establishment. This shift has led to an increase in debt and inflation.
The latest list of major bank debtors, dated mid-December 2024, was recently published by the Central Bank. According to the report, the overdue claims of banks have exceeded 7,890 trillion rials (approximately $9.85 billion). This figure is the result of large loans taken by state-owned, semi-state-owned companies and influential individuals.
The resources come from public deposits. The uncertainty in the repayment of these debts harms the public rights of the Iranian people.
The Iranian Regime’s Debt to Banks Has Increased By “Two and A Half Times” In Past Three Years
High bank interest rates have led to an increase in liquidity. The competition among private banks to pay higher interest rates has fueled liquidity growth, becoming a driver of inflation and an expansion of the monetary base.
Banks have entered various markets without accountability. This dangerous action has disrupted production and destabilized the economy. High bank interest rates have reduced productive activities. While economic growth has stalled, banks in Iran are engaged in non-productive activities.
Banks have altered the path of the economy. They do not extend loans to the private sector in Iran, sidelining it. Bank-affiliated companies, state-owned, and semi-state-owned companies take large loans but fail to repay them.
In reality, banks have directed financial resources to their affiliated entities. Easy loans to insider companies have created massive bank debts, leading to significant economic problems.
Currency fluctuations and the rising price of coins show that the banking system is actively involved in informal markets. Productive activities in the country do not yield similar profits. This indicates that the banking system has moved its capital into speculative currency and coin markets.
In the 2000s, the entry of the banking system into the housing market caused an uncontrolled surge in prices. This growth led to severe recessions, the effects of which are still present.
In recent years, mismanagement within the banking system has led to a decline in public trust. Many people have withdrawn their deposits from the banking system due to the poor performance of banks. This loss of confidence has put additional pressure on the economy.
The lack of transparency in the banking system’s operations is one of the main reasons for the crisis. Banks do not fully disclose their financial reports. This lack of transparency has made oversight of their operations difficult. Insufficient supervision has allowed banks to continue their harmful activities without accountability.
The latest list of major bank debtors, dated late December, was recently published by the Central Bank.
The list includes updated names of debtors from various banks, such as Shahr, Eghtesad Novin, Refah Kargaran, Sarmayeh, and Iran Post, updated through late autumn 2024. Other banks on the list include Export Development, Middle East, Karafarin, Keshavarzi (Agriculture), Iran Zamin, Ayandeh, Dey, Sina, Iran-Venezuela, Gardeshgari (Tourism), and Melli banks.
Subsidiaries of the banking system are all listed among the top bank debtors.
According to the Central Bank, the Iran Government Trading Corporation and the Amir Mansour Arya Group are the largest debtors of Bank Melli. Additionally, companies such as Mazandaran Wood and Paper, Isfahan Steel, and Iran Steel Industrial Group are among the major debtors of Bank Melli.
Railway companies, Verdin Pazan, and Rail Transportation are also included in this list.
Various banks are still struggling to recover their large claims. These debts have not only pressured the banking system but have also harmed Iran’s economy.
The banking system, instead of supporting production, has exacerbated the economic crisis. Their policies have effectively hindered economic development. In Iran, the banking system uses public capital for the ruling establishment’s profiteering purposes. This has widened social inequality and increased poverty.
The banking system in Iran operates as a tool of the ruling establishment. Instead of being accountable to the people, they implement government policies. This has caused banks to lose their intended role in the economy.
