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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
Saving rates fall to 15%
Deposit rates on Iranian bank accounts were lowered to 15% with daily short-term interest rates fixed at 10% since last September in accordance with the plan set out by the CBI, Banker.ir reported.
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 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, 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.
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. A good deal of large debtors have still not managed to refinance their businesses, among them are automotive firms, large construction firms as well as municipalities.
8.1.6 Banks specific issues
Trump officials signal acceptance of Iran remaining in SWIFT
The Trump administration has signalled that it will permit Iranian banks to remain connected to the SWIFT worldwide financial telecommunication system following refusals from Europe to cut Tehran out of the system, according to officials familiar with the situation, conservative media outlet, The Washington Free Beacon, reported on October 24.
30 IRAN Country Report November 2018 www.intellinews.com