Page 27 - IRANRptJun18

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 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
27 IRAN Country Report June 2018 www.intellinews.com