The Hidden Bankruptcy: The Time Bomb of Iranian Banks
The Hidden Bankruptcy: The Time Bomb of Iranian Banks
According to Iran Gate News Agency, while Iran’s economy is buckling under the pressure of chronic inflation, widespread recession, and financial instability, the country’s banking system is quietly grappling with a crisis deeper than what is officially announced. This crisis is rooted not in one or a few banks but in a decaying structure, accumulated imbalances, systemic corruption, and the government’s heavy reliance on banking resources.
Evidence published from bank balance sheets, declining capital, non-performing loans, and increasing debts shows that a significant portion of Iranian banks are effectively in a state of hidden bankruptcy. However, to prevent social shock, this reality is obscured through mergers, account manipulation, and the injection of high-powered money.
The main question now is not whether Iran’s banking system is in crisis, but rather how long this gradual collapse can be hidden from public view and how long its heavy costs will burden society.
Report on Structural Inefficiency and Hidden Bankruptcy Crisis in Iran’s Banking System
A comprehensive analysis based on credible data and evidence
In recent years, Iran’s banking system has become the focal point of one of the country’s deepest economic crises. This crisis is rooted in structural inefficiency, institutional corruption, chronic imbalances, and the unprecedented reliance of the government on banking resources.
The body of existing evidence indicates that many of the country’s banks are in a state of actual or imminent bankruptcy, although this reality is not officially announced due to socio-political consequences.
Widespread Imbalance: The Core of the Hidden Banking Crisis
An examination of the balance sheet structure of Iranian banks shows that a significant portion of them face a serious gap between assets and liabilities. This gap is primarily the result of accumulated bad debts, large loans to affiliated individuals or entities, the decline in the real value of assets, and the growth of bank debts to the central bank.
Analytical bodies have repeatedly warned that hidden imbalances have become the most significant threat to Iran’s financial stability.
Quantitative Evidence: Clear Signs of Financial Decay
Non-performing loans of banks have reached unprecedented levels, and a large portion of granted facilities are practically non-recoverable. Reports highlight clear examples of this crisis. The Future Bank is on the brink of balance sheet collapse, with most of its facilities in default. This is a clear sign of operational collapse. Bank Iran Zamin, with accumulated losses, expanding debt, and a severe liquidity decline, is in an abnormal and unstable state.
Meanwhile, banks have injected a massive volume of facilities into the economy, but these resources have often gone towards non-productive sectors, having almost no lasting positive impact on production.
Structural Factors Shaping the Crisis
Rent and Rent-Seeking Allocation of Facilities
Part of the large facilities has been granted to individuals and enterprises with political or economic connections, loans whose repayment is very unlikely and have tainted bank balance sheets.
Institutional Corruption and Weak Oversight
Lack of transparency in accounts, absence of real risk assessment, and banks entering business activities instead of professional banking have created a suitable environment for corruption and mismanagement.
Government’s Reliance on Banking Resources
Chronic budget deficits have led the government to rely on banking resources and forced the central bank to create money. This process has both exacerbated inflation and deepened the imbalances of banks.
Excessive Bank-Centricity and Lack of Financial Instruments
Insufficient development in the capital market has placed the main burden of financing on banks, while the structure of these banks is not capable of such a role.
Economic and Social Consequences of the Banking Crisis
Decline in Public Trust in Banks
The dissemination of news about bank imbalances, forced mergers, and the possibility of bankruptcy has severely reduced public trust in the banking system and increased the risk of deposit withdrawals.
Persistent Inflation and Deep Recession
Money creation to offset imbalances and government debts has manifested itself in the form of severe inflation and a reduction in people’s purchasing power. This situation has, in turn, led to a production recession and weakened businesses.
Risk of Systemic Banking Crisis
The bankruptcy of several large banks could disrupt the entire banking system. This disruption would quickly spread to other sectors of the economy and threaten financial stability.
Increase in Inequality and Wealth Concentration
The rent-seeking allocation of banking resources has allowed a small segment of society to accumulate unreasonable and amassed wealth, while the main body of the economy and middle and lower classes face severe financial pressure.
Iran’s Banking System and Hidden Bankruptcy
All evidence indicates that a significant portion of Iranian banks are in a state of balance sheet bankruptcy, but this situation is being hidden through mergers, debt rescheduling, the injection of high-powered money, and political support.
Without serious reforms—including complete financial transparency, structural anti-corruption efforts, cessation of business activities, central bank independence, and transformation in government banking and financial policies—Iran’s banking crisis will move towards a systemic collapse.
This situation, like many banking crises worldwide, initially accumulates and remains hidden, then suddenly manifests with heavy social and economic costs. If fundamental reforms do not begin, Iran’s economy will be vulnerable to a widespread banking crisis.