“The Existing Paradox Between Iranian Government and Banking Sector”

“The Existing paradox Between Iranian Government and Banking Sector.”

A paradox exists between Iran's government which desires to increase the investments in various fields of industries by Iranian local private firms and the banking zone, of which offers higher interest rate than discounted or inflation rate to their customers who have savings accounts.  The main reason for this existing problem is simple. Bank's clients incline to save their money in their bank accounts rather than withdrawing their cash and invest in some other capital markets with the lower return on their investments. Before sanctions imposed, the real estate market was booming. After penalties, which led to the decline in the sales level of oil and so lower level of GDP, an indicator of nation's economic prosperity. The dilemma that mentioned above was not difficult to spot, considering that Iran's economy and GDP involve almost 80 percent of government's earnings. 

 

 

The second cause addressing the paradox is the drop in the revenue earned by the commercial and investment banks in real estate market trades. A few solutions which might help fade away the paradox exist that must be top priorities in the government agenda: creating a safe environment for foreign investors to invest their capital into the economy of Iran.  Increase the flow of investment funds into our economy; the government has to put in place a strategic plan addressing the following issues:

 

•  Expanding tourism industry's revenue by marketing promotion

•  Revising the contract terms by government entities such as tax reduction on the foreign investors' side.  

 

• Deploying new technologies and pieces of machinery in exploring massive mine reserves and earning the production level which estimated to reach 700 billion dollars in net profit.  

 

• The ongoing effort of the government to integrate western developed banking schemes with Iran's financial policy.  

 

• Implementing the micro-financing scheme in Iran's financial market to allow small and medium domestic firms accessing the required funds for new business ventures and start-ups.  

 

• Promoting a culture of preparing business plans and project financing feasibility studies by the government before developing the projects. 

 

• There exists low supply level of companies offering the mentioned services in the current financial market. 

 

•  Applying the different policies by the government, along with educated and trained human resources which exist in the economy, standing as a leading economy in the middle east region is reachable.