A smart step for interest-free financing

Bank Melli Iran has introduced “Generator Credit Certificates” (GAM) to support producers and facilitate short-term financing for businesses without charging interest.

According to the Public Relations Office of Bank Melli Iran, these certificates allow applicants to secure financing for businesses without paying interest, making advance payments, providing cash deposits, or maintaining a minimum account balance.

Who can use GAM certificates?

All legal entities purchasing goods and services can utilize GAM certificates. These applicants, referred to as “obligors,” must submit the required documents and evidence to the bank. After conducting credit evaluations and securing the necessary collateral and guarantees, the bank issues the GAM certificates.

Features of GAM certificates

Non-paper-based and non-transferable instruments with no interest coupons.

Each certificate has a nominal value of 1 million rials.

Maturity periods range from a minimum of one month to a maximum of 12 months.

GAM certificates can be transferred within the supply chain, and obligors are required to fulfill their obligations by the due date, including reimbursing the bank for the issued certificates.

 How to obtain GAM certificates

Legal entities purchasing goods and services may request GAM certificates from the bank. After reviewing and approving the submitted documents, the bank proceeds with the issuance of the certificates.

Credit limits and additional benefits

The credit limit for each obligor is up to 200% of their last year’s audited financial statements’ revenue, after deducting outstanding short-term loans and previously GAM certificates.

GAM certificates exempt buyers from adhering to certain ratios specified in the regulations for large facilities and commitments.

These certificates can also be used in commodity exchange transactions and transferred between members of a single beneficiary group.

How transfer works in the supply chain

GAM certificates can be transferred within the supply chain. For example:

An automaker can transfer received GAM certificates to a supplier for purchasing needed parts.

The parts supplier can use these certificates to buy raw materials.

Similarly, the raw materials seller can use the certificates for liquidity needs.

Methods of using GAM certificates

Holders of GAM certificates can utilize them in three ways:

Retaining the certificates until maturity.

Transferring the certificates to suppliers within the supply chain.

Transferring the certificates to the capital market or monetizing them in the money market through a non-banking legal entity.

For subsequent users, GAM certificates can also be used to partially pay off debts to government agencies, as per relevant regulations.

A significant step to support producers

Bank Melli Iran is committed to reducing the financing costs of businesses and addressing liquidity shortages among producers. The bank aims to expand the use of GAM certificates as an effective tool for supporting production and growth.