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some credit institutions in Iran offering over 30% for savers. The average loan rate at its highest was 33% in 2009.
Peyman Ghorbani, CBI Vice Governor for Economic Affairs, said of the measure, “all banks must offer this new lower interest rate for deposits from Shahrivar.” He added, “According to Islamic banking, the interest rates will be paid in cash at the set amount after the new measure comes in.” He added that any new savings packages offered by banks and credit institutions must now be given to the CBI before being offered to customers.
8.1.5 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, CBI director Valillolah Seif says, according to a May 22 Iranian Banker Journal report.
In all, IRR1 trillion ($26,385,224,274) of bad debt currently exists in Iran, according to Seif; 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 ($28,178).
Iran’s debt recovery market is lagging behind international norms in part due to a lack of verifiable systems like credit checks to weed out sub-prime debtors. Although nuclear-related sanctions against Iran were curbed at the start of last year, a good deal of large debtors have still not managed to refinance their businesses. Among the debtors are automotive firms, large construction firms as well as municipalities.
8.1.6 Banks specific issues
Iran attempting to finalise regional card payment network beset by achingly slow delivery
Iran is in negotiations with Russia to finalise a joint regional card payment network, IBENA reported on July 16 citing Abutaleb Najafi, director of the Iranian Informatics Services Company.
The long-awaited connectivity between Iran’s SHETAB bank card system and Russia’s MIR has been delayed by issues such as difficulties in technology integration. Looking at obstacles, Najafi reportedly referred to Iranian banks not having implemented “chip and pin” technology on 90% of their cards.
So far only a handful of Iranian banks have invested in chip and pin technology. They include Bank Shahr “City Bank” and Mellat Bank. Iranian retailers, meanwhile, still have little knowledge of the system.
Najafi described achingly slow progress in achieving connectivity. Only a select group of people have been issued the necessary cards so far, with the objective of getting them to try the cards out in Russia.
"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
31 IRAN Country Report August 2018 www.intellinews.com