Page 34 - bne IntelliNews Country Report: Iran Dec17

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.
8.1.3 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.
Central Bank of Iran (CBI) governor Valliollah Seif has confirmed speculation that the regulator is looking to merge banks weighed down by bad debts in order to meet international debt reduction standards, the Iranian Banker Journal reported on May 27.
Several Iranian state-owned banks, as well as some private banks backed by governmental entities, have suffered in recent years from non-performing loans (NPLs) given to customers during the Ahmadinejad administration of 2005-2013.
Seif said that all of Iran's banks will have to meet international banking standards under the second term of the Rouhani administration with Iran attempting to reconnect with the global banking system.
8.1.4 Banks specific issues
Top Iranian banker urges “gutsy” approach to restructing Iran’s debt-laden banking industry
One of Iran’s top bankers has said that a “gutsy” approach to restructuring the Islamic Republic’s banking industry would see its number of lenders at least halve over the next six years, with closures and mergers required to modernise an industry weighed down by destructive loans.
34 IRAN Country Report November 2017 www.intellinews.com