Syrian Government Banks Prohibit Loans, Fearing Bad Debts

Sources said that if the Central Bank does not approve the request of the Credit Bank, the latter will incur significant losses

Sources say the Central Bank of Syria has "delayed" the approval of the Popular Credit Bank's request to reactivate loan procedures "because it could open a door we cannot close and would restore the problem of dubious debts".

 

The Credit Bank confirmed to the Central Bank that "it has ignored the condition of the Central Bank to stop loans because of cash flow problems, which were an obstacle preventing the Credit Bank from issuing loans, especially to low-income employees. The Credit Bank is ready to give loans if the Central Bank of Syria approves the process, because the cash ratio of the Credit Bank has reached about 55%, while the Central Bank required a rate of frozen reserves not less than 30% of the volume of deposits."

 

The volume of deposits in the Popular Credit reached about 70 billion Syrian Pounds, and the bank can invest about 40 billion Pounds if approved. The sources said that if the Central Bank does not approve the request of the Credit Bank, the latter will incur significant losses because it will pay interest on cash deposits without investing them.

 

The Central Bank of Syria renewed a decision not to allow the private or public banks operating in Syria to issue loans, justifying decision on the basis that loans have been stopped during the last period according to the decision of the government based on the proposal of the monetary authorities to preserve the cash in public banks in order to protect them from risk.

 

Translated and edited by The Syrian Observer

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