Iranian parliament summons Central Bank chief over state bank employee loans

Iran's Central Bank Governor has been summoned by Parliament after reports surfaced of major loans being granted by the country's banks to their own employees and subsidiaries.

Earlier, in response to growing criticism over these loans, the Central Bank released a report on August 30, stating that the total loans provided by banks and credit institutions to their employees, managers, and board members in 2023 amounted to more than 9,100 trillion rials (over $1.5 billion).

Despite this amount of bank loans to their employees and subsidiaries, the Central Bank said that "reviews indicate that, given the issuance of the Central Bank's directives and regulations in this regard, these loans are under controlled management."

Two of the country's most influential banks, Mellat and Sepah Bank, issued the highest volume of loans, providing 190 trillion rials (over $315 million) and 145 trillion rials (over $240 million), respectively, to their subsidiaries last year.

Both banks are notorious for their controversial roles in Tehran’s political and financial arenas, having been accused of supporting military and nuclear programs—activities that have resulted in severe international sanctions. In the face of these sanctions and economic hardships, they have been propped up and kept afloat by Iran's Central Bank.

In reaction to news of the large loans to bank employees and subsidiaries, domestic media have highlighted the significant challenges ordinary citizens face securing loans for housing, marriage, entrepreneurship, and private sector ventures.

State media Khabar Online reported that the loans granted by banks to their employees and subsidiaries are nearly equivalent to the total amount needed for marriage loans for 300,000 people who have been waiting for months with no response from the Central Bank.

On Sunday, semi-official ILNA news agency reported that Jafar Ghaderi, a member of the parliament, mentioned the "distribution of astronomical loans" among bank employees and the "unequal access to loans among the public." He stated that the Governor of the Central Bank and several bank CEOs would be summoned to parliament to provide explanations on this matter.

The report highlights a stark disparity in loan ceilings between different groups. For some bank employees, the loan limit exceeds 10 billion rials (over $16,000), while retirees have a maximum loan limit of only 300 million rials ($500), which is less than what a bank teller earns in a month.

In contrast, tenants seeking rental deposit loans and couples looking for marriage loans face long waiting lists, with the banking system attributing these delays to a lack of financial resources.

Meanwhile, the latest July report from the Codal system indicates that the accumulated losses of Iran's banking system amount to 3,700 trillion rials (over $6 billion).

According to a report by Eco Iran on July 10, "the accumulated losses of the country's banking system have exceeded $6 billion, which is more than half of the projected oil revenues for this fiscal year (starting March 21). In other words, addressing the banks' accumulated losses would require at least 50 percent of this year's oil revenues."

The highest recorded accumulated loss belongs to Ayandeh Bank, which has exceeded 1,140 trillion rials nearly ($2 billion).

The latest figures from the Codal system suggest that Melli Bank had an accumulated loss of more than 760 trillion rials (over $1.2 billion) by the end of September last year, ranking second.

Other banks with significant accumulated losses include Sarmayeh, Sepah, Iran Zamin, Shahr, Dey, Keshavarzi, Maskan, Melal Credit Institution, Parsian, Tosee Taavon Bank, and Taavon.