In 2019, the Central Bank of the Islamic Republic of Iran (CBI) introduced “Generating Credit Certificates (GCC)” in collaboration with the capital market.
In 2019, the Central Bank of the Islamic Republic of Iran (CBI) introduced “Generating Credit Certificates (GCC)” in collaboration with the capital market. The main functions of this security are: - Removing monetary barriers to improve production level, - Directing funds to productive economic activities, and - Providing sustainable working capital for production units. According to the instructions of these securities, the operating financial institution is required to allocate 65% of the GCC to small and medium size enterprises with fewer than one hundred employees; and the rest for large enterprises with more than one hundred employees. The nominal value of the GCC is IRR 1 million, and the date of maturity varies from one month up to 9 months. What is GCC: A Generating Credit Certificate (GCC) is a certificate issued based on a guarantee agreement, operated and guaranteed by the operating and licensed banks of the CBI. These certificates are tradable on the stock markets and OTC markets. The operating banks are in fact the banks and credit institutions having been licensed by the CBI to issue GCC; these banks can only guarantee GCCs based on the guarantee conditions set by the CBI. Credit (operating) banks acts as the intermediary bank between producers and purchasers. The purchasing firm gets financed based on the pro forma invoice issued by the selling firm, and the operating bank allocates the GCC to the selling firm with its guarantee based on the relevant invoice instead of receiving cash from the buyer. These securities are marketable and tradable in the Iranian financial market. The first GCC symbol got listed and traded on the Iran Fara Bourse (IFB) on November 28, 2020.