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December 12 2020
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.‎