Foreign banks awaiting Iran’s green light

A senior Iranian official says five foreign banks are awaiting approval of a law in the Majlis (Parliament) to open branches in Iran.

“The proposal for setting up of five foreign banks is on my table but the fifth clause of article 44 (of the constitution) does not permit their operations,” said Behrouz Alishiri, the head of the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI).

Article 44 of the Iranian Constitution had heretofore placed banking activities exclusively in the hands of government. In tandem with the Law on Usury Free Banking Operations, these two measures effectively blocked foreign banking operations from conducting business in mainland Iran.

A handful of foreign bank branches and representative offices extant in the country were allowed to undertake administrative and coordination activities but were not permitted to open customer accounts inside the territory of mainland Iran, receive deposits or extend normative facilities.

Foreign banks were, however, under special conditions, allowed to function in the Iranian free zones.

Alishiri says the Economy and Finance Ministry has sent a bill, concerning the establishment of foreign banks in Iran, to the Parliament to pave the way for the presence of the banks.

“Any delay in approval of the bill will cause damage to economic activities in the country,” he added.

Earlier in December, the economic committee of the Parliament approved the principle provisions of the bill.

“The main provisions of the establishment of foreign banks in Iran via a joint investment by natural or legal persons and through an approval by the Iranian money and credit council, have been approved,” Spokesman for the Majlis’ economic committee Mohammad-Reza Khabbaz told IRNA.

He added that the setup of foreign banks in Iran would be allowed in different forms of commercial companies.

“The economic committee amended the fifth clause of the article 44 of the constitution for the move to be feasable,” he said.

Khabbaz said that discussion over the details of the bill would start in two weeks.