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Export Development
Through Banking

In a country where private banks are yet to be authorized for operation, commercial banks play a large role in facilitating trade. In the Iranian banking sector, the responsibility of distancing from oil revenues and diversifying exports is more shouldered by Export Development Bank of Iran. Here is Dr. Nowrooz Kohzadi, briefly commenting on EDBI activties and performance:

History: The belief of economic planners and policy-makers in abandoning a single-product economy led to the emergence of a number of institutions and organizations within the First Economic Development Plan, which seemed indispensable to boost Iran’s non-oil exports. One of the most important achievements of the Revolution was the establishment of the Export Development Bank of Iran (EDBI) as Iran’s Exim bank in July 1991, which embarked on its operations in September 1992 after obtaining the authorizations required.
Known around the world as Exim banks, export-import banks play a key role in developing exports and gaining forex revenues. The range of their activities have expanded to providing financial facilities, undertaking risks, offering various guarantees and insurance policies, engaging in domestic and foreign investment, offering credit to foreign states, supplying credit for imports of raw materials and technology, carrying out banking operations, disseminating information, conducting research, and handling other Exim-related operations.
In Iran, the Export Development Bank was established as an Exim bank in order to improve the existing economic situation in the area of non-oil exports.

Sixty-three percent of the country’s top 40 exporters in year 2000 were clients of EDBI

Major Activities: According to its articles of association, EDBI is duty-bound to provide buyers of Iranian export products and services with export facilities, issue foreign exchange guarantees and bonds, finance export projects which are feasible abroad, and provide exporters with consultation and information, all of which help develop Iran’s exports and further strengthen its economic bases. Also, closing buy-back contracts, granting buyer’s credit, and acting as national representative for Islamic Development Bank (IDB) in the area of export fund supply (EFS) are among EDBI’s other activities.

Performance: Since establishment, the bank has succeeded in granting exporters and other applicants over 4,000 billion rials of facilities and $115 million in forex facilities within the framework of Islamic agreements.
EDBI’s share of the country’s non-oil exports up to January 2001 stood at 25.5%, equal to $753 million, which is predicted to exceed $1 billion by the end of the current Iranian year (March 2001).
From among the top 40 exporters in the year 2000, 25 (63%) were customers of EDBI. Also, from among all top exporters in 1998 and 1999, respectively, 67% and 35% were EDBI’s customers.
The bank’s facilities based on the 1378 (March 1999 – March 2000) budget, which was ratified by the General Assembly of Banks, were more than 4.5 times the bank’s capital. Profits in 1999 reached 109.665 billion rials as a result of increased operations toward boosting the exporters’ financial resources.
In 1998, EDBI provided 50% of guarantees for exporters of technical and engineering services, and is currently one of the most active supporters for the export of technical and engineering services. Moreover, the bank has examined and approved 48 buy-back contracts amounting to $75 million.
EDBI’s capital in 1992 was $60 million. It currently stands at more than $150 million, which is expected to reach $200 billion in 2001-02. EDBI expresses its readiness to contribute in provision of working capital for exporters implementing projects that would lead to the export of goods from Iran.