Iranian state banks name major debtors in ‘publicity stunt’

Iran’s president was quick to take credit for state banks publishing the names of major debtors, while critics say the list is not new and the move is a publicity stunt.

Four state-owned banks, including Bank-e Melli, Iran’s largest bank, released their major debtors list on Saturday, six months after the economy ministry ordered them to publish quarterly major debtors lists.

The Ministry of the Economy defines a “large debtor” as persons or entities who hold loans representing at least 10% of the bank’s total resources but have not paid the installments for loans estimated at around $10 billion at today’s exchange rate, but much more in US dollars when the loans were received.

“At first glance, this can be interpreted as an important and positive step in the fight against corruption and the recovery of money owed to state banks,” Eghtesad Online (Economy Online) wrote on Sundaybut he added that the lists are extremely vague and offer no details.

The listings do not contain any information other than the names of individuals and companies. It is very difficult to trace the backgrounds of these people or the ownership of the companies, which appear to be subsidiaries or front companies set up by unknown companies, some linked to state-owned enterprises with well-connected managers.

A man who defaulted on a large loan during his defense in an Iranian court.

“None of the lists include information about when loans were issued to individuals and entities that have a long history of getting loans and not repaying. It’s also not clear whether the banks either decided on their own to grant the loans or were ordered [by other entities]. The information also does not reveal what the collateral for the loans was,” Eghtesad Online wrote.

The publication also said it is equally important to know who approved the loans and to hold them to account. He also said that the release of the lists was intended to allow the government to convince people that President Ebrahim Raisi is keeping his election promises to fight corruption and establish transparency.

Officials say the move is proof that Raisi is keeping his campaign promise to fight corruption in the banking system. “Another of the president’s promises has been implemented. Melli Bank, the largest bank in the country, has published the names of its main creditors,” the government spokesman said. Ali Bahadori-Jahromi said in a tweet on Saturday.

Others like Malek Shariatia member of parliament from Tehran, says the publication of the names of major creditors is proof that the administration and parliament are committed to establishing transparency and fighting corruption.

Based on the finance bill, the government was mandated to publish all information on the main creditors to the central bank.

In 2017, an outspoken reformist lawmaker Mahmoud Sadeghi published a list of Sarmayeh Bank’s main debtors who defaulted. In some cases, he said, loan guarantees have been priced well above their true value.

Sadeghi called the widespread phenomenon in Iran “crony capitalism”, meaning that those with ties to centers of power could easily obtain loans that others find extremely difficult to obtain. Many debtors had received subsidized low-interest loans from banks.

Major bank debtors with bad credit have would have used the money to speculate in the housing, foreign exchange and gold markets rather than investing in production and thus contributed to higher inflation.

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