Page 29 - IRANRptJul18

Saving rates fall to 15%
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 as well as municipalities.
8.1.6 Banks specific issues
Officials discuss linking bank card systems of Iran and Georgia but US restrictions may be in the way
Iranian and Georgian officials have discussed connecting their countries’ digital bank card payment systems, Banker magazine reported on June 26. When it comes to Georgia’s foreign arrivals figures, the Iranians feature prominently. Several flights run by both Iranian and Georgian airlines connect Georgia and Iran. However, Tbilisi has struggled with US banking restrictions applied to dealing with Iran. Iranians have complained of difficulties in opening bank accounts in Georgia, a country they previously regarded as friendly and receptive in terms of opening private and business accounts.
The proposal to link the card payment systems was made by Iran’s Minister of Economic and Financial Affairs Masoud Karbasian in a meeting with Georgian
29 IRAN Country Report July 2018 www.intellinews.com