Economy, Business And Markets

No Restrictions on Credit Card Uses

No Restrictions on Credit Card UsesNo Restrictions on Credit Card Uses

There is no restriction on using credit cards that are going to be issued by domestic banks and cardholders can even purchase imported goods, said CBI’s deputy for supervisory affairs.

“Putting restrictions on purchasable goods would be an inconvenience to cardholders. It would result in the schemes’ failure, like what happened to a similar credit card scheme last year” Farshad Heydari was also quoted as saying by on Sunday.

Earlier this week, the CBI announced that the banking system will start issuing credit cards to gradually meet the customers’ needs for small loans and help pull “the real economic sectors” out of the prolonged recession.

Three kinds of credit cards will be offered: Golden, with a credit of 500 million rials ($14,000 at market exchange rate), Silver, with a credit of 300 million rials ($8,400), and Bronze, with a credit of 100 million rials ($2,800), based on the applicants’ creditworthiness measured by banks.

Last year, CBI Governor Valiollah Seif unveiled an incentive package aimed at financing manufacturers and providing credit services to consumers.

Credit cards up to 100 million rials were to be issued to help consumers purchase domestic durable goods, while cardholders would be charged 12% for the transactions.

However, the plan failed, due to restrictions on purchasable goods and eligible applicants.

“The plan is developed based on the assumption that goods are either produced inside the country or imported through legal channels,” said the central banker.

 “A considerable portion of goods are imported through legal channels so it is fine to purchase these goods, since importers have paid all the fees and duties,” he said.

 Healthy Competition

By offering credit cards, the CBI is also seeking to promote the quality of banking services in the country.

“Applicants’ creditworthiness is measured on the basis of the banks’ criterion,” he said, “Contract terms are open for negotiation by banks and applicants.”

Heydari said lenders offering better services to the customers would be more successful.

Iranian banks currently issue credit cards, debit cards and gift cards, though the first type is not commonly used, as it is limited to VIP customers.

According to Shaparak’s data, banks issued 330 million cards in the last Iranian year (ended March 19, 2016), 1.6 million of which were credit cards. The numbers indicate that even those who managed to get credit cards did not use it, since only 2.64% of credit card transactions were recorded.