Page 31 - IRANRptSep19

8.1.5 Banking connectivity
Russia’s Iran envoy insists countries’ banks will be connected “soon”
Russia’s ambassador to Tehran, Levan Dzhagaryan, has said Russia and Iran’s banking systems will be connected soon, according to IRNA.
For at least three years, Iran has repeatedly stated that its banks will be connected to Russia’s banking system, but the commitment is yet to be realised. As part of the new banking connectivity, the Mir payment system, an internal card processing brand operated in Russia in response to Western sanctions, should be linked to Iran’s Shetab internal payment system. Ambassador Dzhagaryan reportedly once again outlined the plan in a meeting with Iranian officials.
Teething problems in achieving the required connections have been diagnosed according to Iranian Informatics Services Company. It claimed Russia would not move ahead with the plan until Iran upgraded certain banking practices. The key issue appears to be Iran’s payments process. It uses the ‘swiping’ method combined with PIN codes, whereas the Russian process uses the far more international ‘chip and PIN’ approach.
So far, only a handful of Iranian banks have invested in chip and pin technology . They include Bank Shahr “City Bank” and Bank Mellat. Iranian retailers, meanwhile, still have little knowledge of the system.
"The Russians believe that as banking cards in Iran are mostly magnetic and less secure than Russian cards, in the event of counterfeit cards, Iran will suffer the damage, and thus have to pay the costs,” Abutaleb Najafi, the director of Iranian Informatics Services Company, was quoted as saying.
8.1.6 Bank news
Iran’s Bank Mellat strikes ‘secret deal’ with UK Treasury to receive out-of-court financial settlement
India’s IDBI Bank opens Iran trade processing centres in three cities
The CEO of Iran’s Bank Mellat has said the bank has struck a secret deal with the UK Treasury on how to receive an out-of-court financial settlement of $1.6bn damages claim made after a dispute over alleged links of the lender to the Iranian nuclear development programme, ILNA reported on June 25.
Mohammad Bigdeli reportedly said the bank, Iran’s largest private lender, would not reveal how it will receive the undisclosed amount of funds from the UK, and added: “We do not want to receive goods instead of compensation.” Financial payments to Iran are hindered by the US sanctions regime that constrains the Islamic Republic.
The settlement means that Bank Mellat can say it brought the first case of its type successfully resolved to the benefit of an Islamic Republic-backed commercial entity in the UK.
Bank Mellat, 20% owned by the Iranian government, with the remainder privately held, contended that sanctions imposed on it in 2009 damaged its reputation and goodwill in the UK and internationally, causing significant losses. The sanctions forced the bank to wind down its UK operations.
Six years ago the UK Supreme Court ruled that the sanctions were unlawful. The then government had been “irrational” and “disproportionate”, the court said, referring the case back to the High Court.
The UK Treasury issued a statement, reading: “Bank Mellat’s claims have been concluded on terms confidential to the parties.”
India’s state-run IDBI Bank has opened three centres for processing Iranian trade in Indian cities, the Economic Times reported on April 28. Under its unprecedented sanctions regime imposed on Iran, Washington has demanded that all buyers of Iranian oil stop their purchases by May 1. India,
31 IRAN Country Report September 2019 www.intellinews.com