The Strategist

Iranian Banks introduced credit cards for local citizens

09/26/2016 - 16:23

First two Iranian banks (Bank Melli Iran and Ayandeh Bank) started to issue credit cards in accordance with the rules of Islamic banking, portal reports. Islam forbids to lend money on interest, therefore loan granting in the Western sense of this definition is not possible in Iran. Up to the present moment, Iranian banks has produced only debit cards.

Owners of the new cards may use them in accordance with the rules of Murabaha. This is an Islam trade agreement, in which a bank buys necessary goods from the seller, and then sells it to the customer at a premium.

Depending on the level of credit, limit of the value of goods is from 100 million riyals to 500 million riyals (from $ 3 thousand up to $ 15 thousand). Margin level of the Central Bank of Iran is determined to 18%.

According to Ayandeh Bank, it released more than 12 thousand new cards on the first day. The credit cards will only work within the country.

Credit limits and interest payments on the cards will be fixed by the Central Bank of Iran, but each bank will independently take the decision as to whether the client meets requirements for getting the card.

Users will be able to use their cards in Iran online and offline stores.

There is a noticeable warming in the country's financial sector. In early September, three Iranian banks told to Economy Minister of Bavaria Ilse Aigner about plans to open branches in Munich in order to promote business ties with German companies.

The Central Bank of the Islamic Republic of Iran has granted three Iranian organizations permission for establishment of offices abroad.

Bavarian Economics Minister Ilse Aigner, who is a member of the Christian Social Union, has given an interview while in Tehran. This is her second visit to the Iranian capital this year.

"Today, business projects between Bavarian companies and Iran are often not realized because of problems with payment transactions," - said Aigner.

"That is why existence of branches of Iranian banks in Munich is particularly important for our business. This applies particularly to small and medium-sized enterprises, which have significant potential for exports to Iran. It will be easier to use these opportunities in the future," - she added.

Many European companies have complained that, despite lifting the sanctions from Iran, they still cannot have financial support from Western banks. It is closely related to the fact that companies have expressed concern about other sanctions from the United States, which continue to operate.

Under the sanctions related to the nuclear program, Iranian companies have used workarounds for remittances, which are expensive, time consuming and often unreliable.

Ilse Aigner said that Iranian banks will receive professional assistance needed to create branches in Munich.


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