Page 34 - IRANRptOct19

8.1.4 ​NPLs
CBI gives Iran’s NPL rate as 10%
The Central Bank of Iran (CBI) calculates that Iran’s overall bad debt now stands at 10% of the total debt market in the country, ​according to a late 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 ​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 Parsian Bank to open five more branches in Iraq
Parsian Bank, one of Iran’s leading private banks, has announced it is planning to open five branches in Iraq, Tasnim News Agency reported on September 30.
Parsian, which has two existing branches in the country, said each new branch would be backed with initial operating capital of $50mn.
Parsian CEO Kourosh Parvizian announced the planned new branches at a meeting of the Iran-Iraq Joint Chamber of Commerce on September 28.
He added that Iran’s private banks and credit institutions were prepared to provide financing for Iranian technical and engineering projects in Iraq. Parsian is the latest of several Iranian financial institutions that have moved ahead with Iraq plans.
34​ IRAN Country Report​ October 2019 www.intellinews.com