The Money not Returned

More details have emerged from the list of big bank debtors. According to recent reports, the total amount of non-performing loans of banks is estimated at around 100 thousand billion Tomans, while nearly 70 percent of all bank debtors owe over 10 and 50 billion Tomans. Interestingly, non-performing loans of three individuals have topped one thousand billion Tomans.
Less than a week after the first Vice President of Iran spoke of handing the list of 575 big bank debtors to the Judiciary, an undisclosed source revealed that the total amount of non-performing bank loans is above 100 thousand billion Tomans.
Eshaq Jahangiri had previously estimated the total amount of non-performing loans at 80 thousand billion Tomans, ;however, reports suggest that the list of big bank debtors is considerably larger than the list announced by the first Vice President. One categorization divides the debtors according to the amount of non-performing loans as over a thousand billion, over 500 billion, over 100 billion, over 50 billion and over 10 billion Tomans. Expectedly, the higher the amount of non-performing loan, the lower is the number of debtors. Latest reports suggest that among the 1349 debtors whose loans are somewhere between 10 billion up to 1000 billion Tomans, three have non-performing loans worth 1 thousand billion Tomans, two of whom are already imprisoned due to what is called "the investigation of two big economic cases". It is believed that 18 individuals have non-performing loans of over 500 billion Tomans, with their total value of loans estimated at around 15 thousand billion Tomans. Non-performing loans of above 100 billion Tomans is another part of the picture and 42 thousand billion Tomans of non-performing loans belong to only 145 debtors. The total amount of non-performing bank loans above 50 billion Tomans is deemed to be close to 62 thousand billion Tomans, divided between 900 debtors. In other words, approximately 70 percent of debtors have non-performing loans of above 10 billion Tomans.

Non-performing loans; where does it come from?
Iranian banks have struggled with lack of financial resources for quite some time; meanwhile the sanctions and deep stagflation of the past two years have aggravated the situation. Furthermore the number of non-performing loans has been on the rise and has now hit 100 thousand billion Tomans. What is publically called "non-performing loans" is known by Central Bank as "non-current loans" and various numbers and values have been announced for this index. But where does the root of non-performing loans lie in? Some analysts cite two reasons: first, financial and administrative corruption and lack of supervision over finances, and second, economic stagnation. State-owned banks gave out huge loans to some of the associates of the previous administration as a result of government pressures and political ties, whereas the money could be invested in construction projects instead of serving the interest of minorities. Some members of the Parliament believe that debtors feel no pressure or obligation to pay off their loans, though their names have been given to the Judiciary for quite a while. The other side of the coin is that those who justly invested their loans in production units have seen their economic projects coming to a halt due to the stagnation of the past few years and they are yet to clear their debts. A number of bank analysts assume that with the unprecedented plunge of the value of Rial compared to foreign exchanges and the current inflation, the real value of the debt of both groups to banks is virtually lower than the time of granting the loans and the government needs to come up with a solution in this regard.

Returning to political atmosphere; a possibility
The issue of bank debtors -which is essentially an economic matter-, has become a means of political stand-off between rival parties since last year and names and secrets have been revealed. Consequently, the public rightly questions whether the issue of non-performing loans has ultimately turned into a political bone of contention, and if so, what measures will be taken for collecting the massive debt. Non-performing loans have constantly been a matter of contention between the previous administration and the Judiciary and the members of both powers launched bitter verbal attacks on one another plenty of times. The Judiciary claimed that Ahmadinejad's administration does not concede the list of bank debtors, while the executive power accused the Judiciary of "having the names, but lacking the motivation" to prosecute the debtors. Ahmadinejad had announced that 60 percent of financial resources of the country have been blocked by only 300 individuals. Following the ex-president's controversial statement, high-ranking officials of the Judiciary criticized Central Bank for refusing to give the names of bank debtors to the Judiciary.
The government published the draft of two official letters in the press -dating back to 2010 and 2011- and claimed that list of big bank debtors and illegal landowners had been given to the Judiciary.
Central Bank recently provided the Judiciary with the list of 575 debtors and Mohseni-Eje'i, the Prosecutor General of Iran confirmed the news. Regarding the categorization of bank debtors, Eje'i announced: "There are those who legally received loans and invested accordingly and those who did not invest properly. There is also a third group of debtors comprising those who managed to receive loans beyond the law. In such cases, loanees and banks are both held responsible".
Mostafa Pour Mohammadi, the minister of Justice has stressed that the case of bank debtors has not been investigated yet. Fighting the economic corruption and prosecuting those with "illegal economic privileges" was one of the biggest promises of Hassan Rouhani in his presidential campaign. It seems that with the new approach towards non-performing loans, the public is awaiting a swift and serious response from the Judiciary in this regard.