Domestic Banking System
Banking system in Iran is similar to what exists in other countries from many aspects. It provides different kinds of facilities for Iranian and foreign investors, shareholders and depositors. Their services include a wide range which satisfies almost all financial needs of companies and factories, especially internal ones. Interest rates are usually high which attracts people to deposit their money in long-term and short-term bank accounts to somehow participate in the profits of loan takers. Recent policies of Iran president, Mr Rouhani, is to decrease such bank interests so that people will be encouraged to bring their capital into domestic market which consequently results in lower inflation rate.
Currently, there are two types of banks in Iran: Governmental and Private. Governmental banks are those banks whose main shareholder is government (although there is tendency to privatize governmental banks by selling their shares to the public). The other type is private banks which are owned by private sector. Both types are controlled and inspected by Iran Central Bank, located in Tehran.
One of the tools used by banks to help industries and investors is loans. Taking a loan has a relatively complicated process. You need to provide several documents and even guarantors to take a loan. Then you should fill out some forms and make commitments for the reimbursement of the loan. If you are a good customer of the bank with a valuable credit, you do not have to pass all the difficult stages. Iranian Banks offer different kinds of loans such as marriage, house, facilities, production, leasing, jobs and investment loans.
Online banking is a new field in Iran financial system. It is almost ten years that Iranian banks have seriously entered into online banking system. Currently, most Iranian online markets furnish their website with a bank payment service which makes online selling and buying easily possible. Almost all Iranian adults have a credit card from an Iranian bank. A few Iranians carry cash in their pocket these days. They use their credit cards, which are in different types and brands, to buy from stores and do online purchase. It is possible to buy almost everything you need by internet shops today.
Iranian banks credit cards have a 16-digit number, engraved on their surface. They also have a 4-digit CVV2 code and expiry date of the card. A separate bank account is also dedicated to each card. When you want to buy something online ( an airplane ticket for instance), you should insert all the above numbers except the bank account. For money transference, only the 16-digit number is needed.
International Banking in Iran
International online banking is very limited in Iran. Due to US and EU sanctions, Iran is detached from international banking system which means that transferring money is so much restricted from/to Iran by banks. There are certain banks in many countries that have links with Iranian banks and make connections possible. If you desire to transfer some money to Iran, you shall refer to such banks in your country and ask for the transference and do what else is needed.
There is another way which is mostly used by Iranian firms and companies to transfer money internationally. They use international exchange offices. There is a number of exchange offices in Iran which have accounts in foreign banks and have the possibility to get the money and transfer it to Iranian bank accounts. The only disadvantage is that transference rate is somehow high and unreasonable.
Iranians can have international credit cards such as Master and Visa and can buy many products online but such cards are not connected to bank accounts so they cannot be used for transferring money and online selling. Master and Visa Gift cards are very popular among Iranians.
Two famous types of bank deposits in Iran are long and short term deposits. In long term deposits, the deposit maker expects for a higher profit from his deposit and does not need the money in short term. So he/she deposits for a period of (mostly) 5 years and after the end of these years he can reimburse all his money and the profit he gains from his deposit. The deposit maker may need his money during the deposit period so he makes a short term deposit. The profit on such deposits is less but the money is accessible whenever the deposit maker needs it unlike long term ones in which the money is inaccessible for five years. This inaccessibility does not mean that there is no way to get the money from the bank. It means that you are committed not to take money sooner than 5 years but if it was urgent, you can get your money by breaking this commitment and the bank will reduce the committed profit in return.
Current account is another famous bank account. This type is mostly famous among business owners. The most important feature of current account is that the account owner gets a series of checks from the bank so he can make his payments by his bank checks whenever he lacks money. Checks are temporal bills of exchange in Iran. It means that the checker signs a check which dates to 6 months later. Within these 6 months, he does some business and provides the amount of check in his bank account so when the check receiver refers to bank, he gives the check to the banker and gets the defined amount in cash. Checks are considered valuable bills of exchange which are so popular and useful in today`s Iran market between businessmen.
FAR Law Firm