The Central Bank of Iran (CBI) has officially launched its new scheme for helping small and medium-sized enterprises (SMEs) and other manufacturers with an initial credit worth of $3.7 billion.
CBI governor Abdolnasser Hemmati said on Tuesday that the new credit facility, dubbed the Productive Line of Credit, or GAM in Persian, would enable manufacturers to obtain documents from the banks that would guarantee payments owed to suppliers of raw materials and others on the supply chain.
Hemmati said an initial fund of 500 trillion rials (just over 3.7 billion) had been earmarked for the scheme through resources of four major Iranian banks, namely Melli, Saderat, Tejarat and Mellat.
“These credits would gradually be given to active manufacturing units in the country,” said the chief banker, adding that SMEs were a main focus of the credit facility as the government seeks to help them survive the current economic situation of the country.
Officials have said that letters of credit issued under GAM can also be sold in the market with a discount, enabling the manufacturers to access the cash they need for their activities.
Experts say the new scheme would prevent any inflation that could be caused by government’s massive injection of liquidity in the market.
The launch of the credit facility comes despite tight finances at the CBI and amid government efforts to diversify the economy away from oil as Iran’s direct sale of crude, once a staple of government funds, remains under American sanctions.
Hemmati said GAM was a manifestation of CBI programs to help Iranian economy grow without relying on oil revenues.