Page 30 - IRANRptAug18

IRR508.6tn ($11.32bn) and IRR1.65 quadrillion ($36.73bn), respectively, indicating a 32.2% and 22.2% growth y/y.
Non-government banks and non-bank credit institutions held more than IRR1.88 quadrillion ($41.85bn) in foreign assets during the 10th month, marking a 30.1% increase y/y.
Government and non-government actors owed IRR901.9tn ($20.1bn) and more than IRR6.34 quadrillion ($141.1bn), indicating year on year rises of 42.8% and 17.4% respectively, to commercial banks in the period.
The CBI said it held more than IRR3.8 quadrillion ($84.57bn) in foreign assets by the end of the 10th month, which indicates an annual increase of 13.5%.
8.1.3 Loans
CBI pushing for loan-friendly banking
Iranian regulators seem likely to force banks to lower interest rates in coming months in line with the re-elected Rouhani administration’s plan to switch the banking system from savings-based to loan-friendly. Peyman Ghorbani, CBI Vice Governor for Economic Affairs, said that commercial loans must be set from 18 to 19% from September 2. Loans were locked at 20% and above before the proposal to cut rates.
As it is, the banks are struggling with the current rates forced on them by the CBI as their business plans were previously based on high-interest savings accounts.
The lowering of interest rates is also set to come into direct conflict with the upgraded capital adequacy ratio lately outlined by the CBI. Banks that do not meet the ratio are at risk of losing their licence, the central bank says.
8.1.4 Deposits
Iran raises maximum deposit limit for foreign residents fivefold
Saving rates fall to 15%
Iran’s Money and Credit Council (MCC), which works under the auspices of the CBI has decreed that resident foreign bank account holders can now hold IRR5bn ($131,000) in their account over a 12-month period, the Financial Tribune daily reported on September 8.
The MCC, which meets every three months, is a decision-making advisory body which acts as a go-between the commercial banking sector and banking regulators. Its move, announced following its latest quarterly meeting, pushes the maximum up from IRR1bn ($25,690).
The figure is still short of the annual salary earned by many expatriate workers in Iran. In practice, however, the banks do not bar resident foreigners from placing money in their account. Earlier in February, the CBI stated that to facilitate growth in foreign investment in the country, foreign workers must be given the same local banking sector access as Iranians.
Deposit rates on Iranian bank accounts will fall to 15% with daily short-term interest rates fixed at 10% from September 2 in accordance with the plan set out by the CBI, Banker.ir reported on August 22.
During the past decade, interest rates have historically been above 20% with
30 IRAN Country Report August 2018 www.intellinews.com