2023-12-05 13:08:00
The Bank of Israel Faces Criticism Over Monetary Loan Program Exclusion
The Bank of Israel has come under fire for its decision to exclude non-banking entities from its monetary loan program aimed at helping small businesses. The program, which allows banks to raise capital directly from the central bank at a reduced interest rate, has been criticized for excluding non-bank financing sources.
Uriel Lin, President of the Association of Chambers of Commerce, expressed his disappointment with the exclusion, stating that the Bank of Israel has deprived non-banking credit companies of distributing much-needed financial assistance to businesses at a critical time.
However, in a recent discussion held in the Knesset’s Economic Committee, a decision was made to allow discounted loans for both banking and non-banking credit providers. Under the new plan, credit providers will need to provide collateral to the Bank of Israel in exchange for discounted financing, which they can then offer as discounted loans to small or micro businesses.
The representatives of the Bank of Israel defended their original plan, stating that the program is intended to be neutral in terms of its impact on credit providers. They emphasized that the central bank does not intend to support or help provide specific credit between a bank and a non-bank entity.
Despite the criticism, the Bank of Israel maintains that the program was designed to provide aid during the current economic challenges and does not have a detrimental effect on the state of competition in the financial system. They also pointed out that central banks in other advanced countries do not provide monetary loans to non-bank entities.
The decision to include non-bank financing sources in the program is a positive step towards supporting small businesses during these difficult times, ensuring that all credit providers have the opportunity to access much-needed financial assistance.
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