The Central Bank of Iran has notified an executive directive to seven banks for allocating a major portion of their annual budgets for creating sustainable jobs through loans and incentives.
“The executive directive for clauses A and B of Note 19 of the 2017-18 annual budget has been notified to Bank Melli Iran, Bank Sepah, Bank Refah, Bank Mellat, Bank Saderat, Tejarat Bank and Cooperative Development Bank for implementation,” CBI announced on its official website.
The two clauses allow the government to devise policies and plans for creating new and sustainable jobs and use the support of various organizations, banks and executive branches in line with “democratizing the economy, maximizing economic participation, employing the vast potentials of the active population of the country and using the competitive capacities of various regions in Iran (by prioritizing rural and underprivileged regions)”.
To do this, the administration of President Hassan Rouhani must devise and communicate investment priorities for different fields of activities in provinces in collaboration with the private sector and cooperatives, create capacities for the active participation of target communities through executive entities and create potentials in rural regions and target communities.
The budget also bounds the government to disclose information on financial incentives, utilize each of its executive entities to continuously and comprehensively provide financial support, promote recovery in housing, construction and public services sectors, and prioritize small- and medium-sized enterprises and handicrafts for allocation of incentives.
As the budget itself asserts, the executive directive includes “forms of financial support depending on regions, amount of loans and legal and real persons” based on suggestions made by the Management and Planning Organization and in collaboration with relating executive entities i.e. the central bank.
The executive directive notified by the CBI indicates that after the approval in expert committees of the High Council for Employment, projects eligible for loans will be introduced to the seven agent banks by the employment task groups of their respective provinces.
The agent banks will then review and approve or disapprove the loans for a project at most within a month from the completion of the related documents “within the framework of banking regulations, which correspond with rates approved by the Money and Credit Council”.
MCC, a top-tier financial decision-making body with the CBI, set bank interest rates at 18% in its meeting of last July.
According to the CBI directive, if the applicant for the loan is eligible to receive subsidies, the amount of the subsidy will be wired to the account of the applicant by the Ministry of Cooperatives, Labor and Social Welfare at the end of the project.
In conclusion, the seven agent banks have been obligated to send monthly performance reports on projects and the use of loans to the central bank.