Economy, Business And Markets

Credit Card Scheme Amplified

Credit Card Scheme AmplifiedCredit Card Scheme Amplified

Central Bank of Iran has modified the credit card scheme, expanding the list of eligible applicants and the range of purchasable goods.

Naser Hakimi, head of the IT department o the bank, said the credit cards could also be used for buying foreign goods. “Card holders would be charged  12% interest for purchasing locally-made products and 21% for imported goods,” the Persian newspaper Donyaye-Eqtesad reported.

The new scheme is available to a larger group of people. Applicants for the credit cards should be on payrolls while the initial plan was limited only to government employees.

The credit card scheme was introduced on October 18 as a part of the government’s stimulus package to help domestic manufactures and boost consumer spending.  It seeks to also assist companies reduce their inventories by allowing credit up to 100 million rials ($3,300 at the official exchange rate) per person.

“CBI ceiling for the scheme is 42 trillion rials ($1.38 billion),” Hakimi said. It took two months for CBI to finalize the scheme.

“It was planned to be a short-term initiative but after talks with manufacturers, the bank decided to expand the scheme,” he said, “the cards could be used also for future stimulus programs.”

While the scheme was initially restricted only to purchasing home appliances and mineral products, chemical and cellulose products have also been added to the list.

“Cardholders should clear their debts within one year,” according to Hakimi though the earlier plan included a two year repayment period.

 Market Displeasure

News that the scheme would also cover foreign goods has led to discontent among domestic manufacturers.

An official at Home Appliances Union said that incentives for foreign products will not help pull the market out of recession.

“The scheme would lead to an increase in imports. Imported items do not need incentives and buyers will buy them irrespective of the much higher interest rates,” Eghtesadonline website quoted Habibollah Ansari as saying.

Domestic manufactures had been offering their wares with minimum profit to survive the recession in recent years, he recalled. “It is the time for supporting domestic producers,” he said echoing the disappointment of his peers grappling with high costs, low sales and huge inventories unseen in recent history.