Iran's state-dominated banking system has $48 billion (Dh176.3bn) in non-performing loans and it is on the verge of a crisis, according to the Islamic Republic's central bank governor.
"How would it be possible for the banking system to show any profit with $48bn worth of loans in arrears," the Ettelaat newspaper quoted Governor Mahmoud Bahmani as saying.
Referring to a lending spree in recent years, he said: "Of course, the reality must be accepted that the opening up of the banking system's resources sack in the past few years has brought them [the banks] to the brink of crisis."
Iranian governments have in the past often instructed state banks to provide low-interest loans to various sectors in order to boost the economy, saddling the banking system with non-performing loans.
Separately, a pro-reform daily said a shortage of cash at some state bank branches in Tehran and the city of Isfahan over Saturday and Sunday had caused queues and "tension and anger" among customers. The Bahar daily did not give a reason for the cash shortage. There was no immediate comment from officials on the report.
Citing witness reports from an unnamed bank branch in western Tehran on Sunday, Bahar said: "The customers were told there was no cash... the bank's doors was eventually closed to customers, as a result of which a customer was injured."
Economy and Finance Minister Shamsoddin Hosseini Iran plans to remove limits on foreign investment by the end 2015.
The government will also sell industrial and petrochemical companies during a five-year plan ending in 2015, Hosseini said, according to Press TV.
The minister commented yesterday in a meeting with South African Parliament speaker Max Sisulu.
In another report, the official Irna news agency said, citing the 2010-11 budget that Iran's government wants to set up a new National Development Fund (NDF), to which at least a fifth of the country's oil and gas revenue would be transferred.
The proposed fund would help turn Iran's "natural wealth into sustainable and productive assets", Irna said.
It said the NDF's top priority would be to invest in Iran, the world's fifth-largest crude exporter.
Its board of trustees would include the president, the vice-president in charge of planning, the oil minister, the economy minister, the central bank governor and two other ministers picked by the president.
Making clear the NDF would replace the existing Oil Stabilisation Fund (OSF), Irna said the OSF's assets and legal commitments would be transferred to the new fund.
The OSF, established in 2000, is a contingency fund set aside by the government to cushion the economy against fluctuating international oil prices and help both the public and private sectors with their hard currency needs by extending loans. The contingency fund forms part of the Islamic Republic's foreign exchange reserves, but its size and the overall foreign exchange reserves are not regularly revealed to the public.
President Mahmoud Ahmadinejad said in December 2008 that the OSF was worth the equivalent of over $23 billion.
The government needs parliament's permission to draw funds from the OSF. The Irna report did not make clear whether this would also be the case with the planned new development fund. (Agencies)
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