The debt collection agency will be formed to settle the loans and "reduce them as much as possible", Barat Karimi was also quoted as saying by BMI's official news website.
Noting that NPLs lock up a bank's assets, Karimi added that recovering them will bring lost capital back into circulation, which would also prove beneficial to the bank's customers.
"Bank Melli currently uses the usual ways of tracking bad loans, while the planned company will accelerate the process," he said.
Bank Melli currently uses the usual ways of tracking bad loans, while the planned company will accelerate the process, he said.
In early May, BMIs chief executive, Mohammad Reza Hosseinzadeh, announced that the banks ratio of non-performing loans to total loans stood at 7.7%, which are about 3% lower than the average ratio for the domestic banking system.
Problem loans have proved extremely problematic for Iranian lenders, which constitute a significant portion of banks assets.
Asked whether forming a separate entity for recovering NPLs would eventually prove cost-effective for Bank Melli, Karimi remarked that the idea of establishing such a company has been around for a while.
The purpose of this company will be to recover [bad] loans in small volumes and since clearing these loans will be in the form of cash, the revenue generated for the bank will be very high and therefore the establishment of such a company will be economically viable, he added.
Stressing that technical measures have been undertaken to create the debt collection agency, the member of BMI board said he is confident the positive ramifications of the company will outweigh its costs because the successful results of such a move have been witnessed in other banks. Karimi said he is hopeful the company will begin operation during the current fiscal year (started March 21).
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