Reported by HPMM Group according to FINANCIAL TRIBUNE ;     The Association of Private Banks and Credit Institutions has reached an agreement with its sister club of state-owned lenders to direct the bulk of their credits toward the revitalization of distressed urban and rural areas, the secretary-general of the association said.

The agreement was reached in the latest meeting between the respective heads of private and state-owned banks’ associations, Kourosh Parvizian and Mohammad Reza Hosseinzadeh, which was also attended by Farshad Heydari, deputy for supervision at the Central Bank of Iran.

“The results of the meeting were presented to the governor of the central bank in a letter in which he was asked to dedicate one of the meetings of the [financial decision-making body] Money and Credit Council to this decision and to overcome the challenges of the banking system,” Mohammad Reza Jamshidi also told IRNA on Friday.

As to the reasons behind this decision, the official said it came after the massive 7.2 magnitude earthquake shook the western province of Kermanshah and the commitment undertaken by the banking system to rebuild it.

According to Jamshidi, redirecting the resources of the banking system toward revitalizing distressed urban and rural areas would not only entail lesser damage to homes in the event of a natural phenomena, but would also stimulate the housing and construction sectors in addition to affiliated sectors that are currently mired in a longstanding recession.

Attending to distressed urban and rural quarters is a major promise of the administration enshrined in the Sixth Five-Year Development Plan (2017-22) and the official believes that the banking system would prove highly useful in this regard when a number of hurdles are cleared.

“A number of banks have currently established portable booths in quake-stricken areas and have begun the process of allocating loans, while calling on their provincial directors to speed up the process,” Jamshidi added.

The official concluded by saying that the banking system is also currently tasked with rebuilding a 96-bed hospital in the western city of Eslamabad-e Gharb, which is to start soon after its administrative procedures have been finalized.

Loan Interest Cuts

On Thursday, the head of the Association of Private Banks and Credit Institutions pointed to the ongoing concerted efforts of banks to reduce interest rates on loans–currently at 18%–following the reduction of interest rates on deposits to 15% by the central bank months ago.

“By reducing interest rates on loans, the banks would more easily grant access to loans for businesses,” Parvizian added in a provincial gathering of the Government-Private Dialogue Council in Khorramabad, a city located in the southwestern Lorestan Province.

The official, who is also chief executive of the private Bank Parsian, also stressed on stabilizing the financial system, boosting transparency and combating corruption.