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National Development Fund



Regarding the Middle East Bank core business focused on offering services to legal persons, with the manufacturers and industrialists of the country in the center of attention, the Bank has always placed special importance on meeting the needs of manufacturing and industrial units. Moving in that direction, the Middle East Bank entered into agreement with the National Development Fund to act as the Fund’s agent in order to on-lend its foreign currency facilities. To that end, the Bank examines, accepts and approves the projects which satisfy the required rate of return, satisfy statutory requirements and fall within the Bank’s risk- limits (in accordance with relevant documents) and, having received required collaterals and guarantees, grants loans in foreign currency out of the Fund’s resources.  The General issues related to these facilities are as follows:

The projects and activities qualified to benefit from the facilities
Projects and activities in oil, gas and refinery sectors and petrochemical industry,
Projects and activities which are capable to honor repayment of principal and payment of interest, in foreign exchange, out of the foreign exchange revenues generated by the export of their own products,
Projects and activities in railways sector, provided that the Central Bank of Iran takes on commitment to sell foreign exchange to these projects to honor their debts,
Projects and activities in power sector and desalination equipment provided that the repayment of principal and payment of interest is made in foreign exchange.

The persons qualified for receiving financial facilities
The Fund’s facilities are granted to companies and entities which a  minimum of 80% of their shares or capital participation, directly or through legal persons, belongs to natural persons,
Extending the Fund’s facilities, through the agent banks, to economic firms which more than 20% of their directors, irrespective of ownership structure, are appointed by the Governmental authorities is prohibited,
Companies and entities whose absolute maximum shares belong to public entities or NGOs, such as endowments, pension funds, insurance funds or public charities, are construed as the entities and companies belonging to non-governmental public entities,
Granting loans to qualified legal persons is contingent upon their proportion of shareholders equity to the total assets of the company (ownership ratio) remain under 20% when the application is submitted to the agent bank and at any time during utilization phase (Projects and activities in oil and gas upstream sectors are excluded from this clause due to the large size of investment they need).

General terms and Conditions
Expected  interest rate of facilities (based on US dollar) shall be 6%  per annum for general items and 4% for water and agriculture sectors as well as Projects and activities located in Preferential Rate Zones.
Interest rate for upstream oil and gas sectors and petrochemical industry shall be 8% in all zones.
The drawdown period, project construction until trial production, is set to be maximum 3 years,  grace period maximum  6 months and repayment period maximum 5 years. In any case, the total of all periods, including drawdown, grace and repayment periods, shall not exceed 8 years.
For foreign equipments and machinery, the pro forma invoices are required to be issued by the real manufacturing companies or the official sale representatives or units of those companies.
The facilities are extended solely in foreign currency and the recipient is not allowed to convert them to Rial in the domestic market.
The currency conversion risk is borne by the customer and the customer is required to repay the facilities in foreign currency.
Payment and repayment of facilities is made in currencies which are freely convertible in international markets (EURO, JPY, UAD, KRW, GBP and CHF).
Paying off all the installments and full settlement of all facilities received from National Development Fund is the prerequisite for natural or legal persons to receive facilities from the Fund’s resources again.
Observing “The Law on Maximum Use of Domestic Production and Service Capabilities of the Country for Meeting the Needs of the Country and Enhancing Exports” approved on 23, July 2012 is required.
The foreign currency facilities granted to any project, through the resources of the Fund, shall not exceed the foreign currency expenses of the project.
The facilities are granted by opening letters of credit and in accordance with the regulations of the Central Bank of Iran.