Page 38 - IRANRptSep20

May ​Iranian Banker Journal​ report.
Around IRR1 trillion of bad debt existed in Iran; however other figures suggest the figure of non-performing loans is higher, with banks struggling to retrieve assets due to old-fashioned regulations which mean it takes a very long time to clear debts.
Iran’s overall NPL figure stood at 18%, according to prior CBI statistical releases. The reason behind the supposed improvement in NPL clearance is the Rouhani cabinet's move in February to approve the penalty waiver for loans amounting to IRR1bn.
8.1.5 ​Bank merger
Iran and Russia ‘slowly’ integrating banking systems
Iran and Russia have reiterated their intention to integrate their respective bank card payment systems, according to ILNA on July 14. The Shetab (interbank information transfer network) and Mir (Friend) card payment networks, two indigenous card payment systems developed to counter Western supremacy in the sector, were initially set​ ​to be connected in 2017​. ​However, years of delays and Iran’s banks not conforming to modern chip and pin standards have slowed down proceedings. In Iran’s case, the country is desperate to connect its card system to another state, as no foreign cards currently work with Iran.
The long-awaited move by the Central Bank of Iran (CBI) would make Russia the first country to accept Iranian bank cards since the Islamic Revolution of 1979, which saw US-based card companies such as Visa and MasterCard driven out of Iran.
The two sides are keen to conduct trade in national currencies, "though the plan is facing hurdles mostly due to fluctuations in forex rates [in Iran]," Behrooz Olfat, head of TPO's Europe and North America Department, said to Iranian media.
The programme has long been pushed by the Iranian side, while ​Russia has remained publicly sluggish​ ​on the programme. In 2019, Russia’s ambassador to Tehran, Levan Dzhagaryan, said Russia and Iran’s banking systems will be connected “soon.”
It was not until the 1990s that Iran started issuing its own internal cards, which work under the Shetab electronic banking clearance and automated payments system.
The Mir Card, although only introduced in 2015, had some 176 Russian lenders using its system as of January this year, with 97% of ATMs and more than 75% of payment terminals accepting the card.
All Iranian banks and credit institutions have been required by a CBI directive to connect to Shetab. ATMs are prevalent across all of Iran’s cities and towns. The number was in 2016 estimated at more than 39,000.
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 merging of the banks is believed to be seen by officials as part of Iran’s realisation of the much-delayed Palermo convention on anti-money laundering (AML) and countering the financing of terrorism (CFT). When completed the
38​ IRAN Country Report September 2020 www.intellinews.com