Economy, Business And Markets

Call for Immediate Banking Reforms

Call for Immediate Banking ReformsCall for Immediate Banking Reforms

Following the recent announcement of a landmark nuclear deal between Iran and the six world powers in Vienna, a market analyst has urged the government to push for banking reforms, a move he hopes would help Iranian banks rejoin the international banking system.

Heydar Mostakhdemin Hosseini, former deputy of legal affairs at the Central Bank of Iran, blamed nuclear-related sanctions imposed on Iran over its nuclear program for distancing the country’s banking system from the international banking system.

“Although international banking has considerably improved compared to the last two decades, Iran’s banking system has remained outdated, causing efficiency and productivity to decline,” he told Eghtesad News website on Saturday.

As sanctions’ removal is expected to take four to six months, Hosseini urged the CBI and commercial banks to take advantage of this opportunity to make speedy structural changes in the banking system.

“Banks are required to foster international relations and use brokers to facilitate financial operations in doing business with international counterparts,” he said, adding that banks should also provide training for their staff to update their skills in accordance with modern banking requirements.

Pointing to the central role of banks in the Iranian economy as the main financer of manufacturing projects, he said one substantial benefit of the lifting of banking sanctions would be banks rejoining SWIFT, from which Iran was excluded in 2012.

SWIFT facilitates the transaction of foreign currency for exports, imports and manufacturing, therefore banks can resume transactions in this area.

“In previous years, banks had to retain their place in international markets by circumventing sanctions through limited ways that pushed up the costs significantly,” he said.

As transactions would receive an impetus following sanctions’ lift and a large amount of banks’ frozen assets would be released into the banking system, he said structural reforms are prerequisites to the dynamic role of banks in causing an upsurge in economic activities. He also considered unification of foreign exchange regime as another reform that should be postponed until Iran’s frozen foreign assets are released within the next few months.