Page 43 - IRANRptJun22

With money supply in Iran expanding at a tremendous speed, the soaring use of sight deposits reflected people’s reluctance to keep money in banks for extended periods as they anticipate prices will rise at a higher rate than the interest rates on offer from local banks, it added.
Total sight deposits rose by Iranian rial (IRR) 2,572.5 trillion ($8.7bn at the official rate, $61bn at the free market rate) in the first half period to reach IRR5,407.4 trillion and were up 47.7% during the six months in question, according to a cited Central Bank of Iran (CBI) monthly report.
8.1.4 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.
8.1.5 Bank news
Russia’s Mir and Iran’s Shetab payment systems to be linked as Moscow, Tehran accelerate trade, investment ties
Iran and Russia have struck a deal to connect their payment settlement systems—namely, Russia’s Mir and Iran’s Shetab—Russian Deputy Prime Minister Alexander Novak announced during a May 25 visit to Tehran.
There have been discussions for several years on the unification of Mir and Shetab as well as the operation of the countries’ national financial messaging systems. Those talks appear to have been accelerated given the onslaught of Western sanctions in response to Russia’s invasion of Ukraine that has forced Moscow to seek to quickly build up trade and investment links and opportunities across Asia.
“We’re on track to raise trade, economic, logistics, investment, financial, banking cooperation, despite the unprecedented pressure that Russia is experiencing,” Novak said at a meeting with businesses in Tehran, as reported by news service Interfax.
He added: “We are ready to continue the implementation of already-initiated projects and to launch new ones.”
The linking of Mir and Shetab would go some way to dismantling the international banking blockade that applies to Iran because of the effect of US sanctions.
“One of the key topics [in the negotiations] was the creation of conditions for mutual settlements and the passage of payments between our legal entities and organisations,” Novak added in Tehran.
“It is important that we have agreed to move as much as possible to settlements in national currencies. Together with the central banks, we discussed the distribution and operation of the financial messaging system, as well as the connection of Mir and Shetab payment cards,” Novak said. Russia’s central bank founded the Financial Message Transfer System (SPFS) in 2014. From the start, it was talked about as a replacement that could be turned to if Russian banks were disconnected from SWIFT, as they have been
43 IRAN Country Report June 2022 www.intellinews.com