Page 44 - IRANRptAug22

8.1.5 Bank news
National Development Fund of Iran blocks FX accounts of debtor banks
Iran to accept Russia Mir card payments ‘soon’ to accelerate trade, investment ties
The National Development Fund of Iran (NDFI) has announced the blocking of the FX accounts of commercial and state banks that have failed to pay instalments, IBENA reported on July 26.
The national financial body acts as a large escrow fund for international transactions.
“This issue has long become a challenge as regards the National Development Fund and the borrower facilities with overdue loans,” the NDFI said in a statement.
The NDFI did not state the amount owed by the debtor banks, but it is likely to amount to hundreds of millions of USD.
“The National Development Fund must collect its claims when the loans are due. Accordingly, the fund, in coordination with the Central Bank [of Iran] has started blocking the foreign currency accounts of banks that have not paid instalments. They are overdue,” the statement added.
The NDFI and the CBI said they would be holding meetings with the debtor banks to work out new repayment schemes.
Iran will soon start accepting payments made with Russian Mir bank cards, Iranian Deputy Foreign Minister for Economic Diplomacy Mahdi Safari told RIA Novosti in an interview on July 27.
There have been discussions for several years on Iran accepting Mir card payments and Russia accepting payments made with Iranian Shetab cards, as well as on the mutual facilitation of both countries’ financial messaging systems and the forming of a new system in the mould of SWIFT. Talks appeared to accelerate given the onslaught of Western sanctions faced by Moscow in response to Russia’s invasion of Ukraine. As part of its response to the sanctions, the Kremlin has been seeking to quickly build up and expand trade and investment links and opportunities across Asia. Russia is now the world’s most sanctioned nation, replacing Iran in first place. The common predicament faced by Moscow and Tehran makes efforts even more attractive to both parties.
“I think that this payment system [Mir] will soon be activated in Iran. However, at the moment I don’t know whether it can be [technically] used in Iran at all or not, but there is an agreement on this matter,” said deputy foreign minister Safari.
Iran’s banks lack enough desired conformity with global modern chip and PIN standards. No foreign bank cards currently function in Iran.
So far, only a handful of Iranian banks have invested in chip and PIN technology. They include Bank Shahr “City Bank” and Bank Mellat. Iranian retailers also face a challenge in updating their card-reading machines, many of which are swipe-only.
Russians can use Mir cards in 12 countries to date: Turkey, Vietnam, Armenia, South Korea, Cuba, Uzbekistan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia.
All Iranian banks and credit institutions are required by a Central Bank of Iran (CBI) directive to connect to Shetab.
ATMS are prevalent across all cities and towns of Iran, a country of around 85mn.
The interbanking payment cards programme has long been pushed by the Iranian side, while previously Russia remained publicly sluggish on it. As far back as 2019, Russia’s ambassador to Tehran, Levan Dzhagaryan, said Russia and Iran’s banking systems would be connected “soon.”
44 IRAN Country Report August 2022 www.intellinews.com