The Central Bank of Iran is devising a set of rules to let foreign nationals use credit cards offered by Iranian banks on Thursday, a senior official of the bank said.
"At present, individuals living outside Iran's borders cannot use these cards but as part of a rulebook being developed in the CBI, international cards can become available to foreigners," Farshad Heidari, CBI’s deputy for supervisory affairs, was quoted as saying by Mehr News Agency during a press conference on Monday.
He added that the plan would also allow non-Iranians to open bank accounts with Iranian banks.
The announcement follows CBI’s scheme to offer credit cards on a large scale inside the country, which was kicked off last week. Three types of credit cards are being offered, with a credit cap ranging from 100 million rials ($2,800) to 500 million rials ($14,000).
Based on the scheme, cardholders will not be charged any interest if they clear their debts within a month, otherwise they will be given 12-36 months to settle their debts at a lending rate of 18%.
Credit Cards Framework
The central banker elaborated on the newly-unveiled scheme, saying that “the CBI aims to provide all citizens with microcredit”.
“All the banks are basically obliged to provide the public with microloans,” he said, noting that banks will have to report the status of micro-finance to CBI on a continual basis.
The credit card scheme is expected to replace the thorny and often dysfunctional process of obtaining small loans from the banking sector. Banks pay a considerable amount of loans each year. However, small loans account for a meager portion of the total lending.
“Lenders are expected to participate in the credit card plan, as much as their resources allow them,” he said. “They would receive negative scores, if they fail to meet [CBI’s] stipulations.”
Bankers, reportedly, have been less than enthusiastic about the scheme–an apathy that has taken few analysts by surprise given the dire conditions of many banks.
Except for the state-owned Bank Melli Iran that issued 20,000 credit cards on Sunday and the private Ayandeh Bank, a handful of other banks surveyed by the Financial Tribune said they had not received the relevant guidelines yet.
Fines for Violators
Heidari announced that the CBI has employed meticulous supervisory tools to minimize the illicit usage of credit cards by cardholders and salespeople.
“Using POS terminals for withdrawing cash from credit cards will be recorded as a negative point in the cardholder's credit history,” he said.
“This would not only affect their creditworthiness, but would also lead to heavy fines."
However, he noted that the CBI has employed measures to reduce the need for withdrawing cash from the cards, as “they can be used for purchasing any type of goods or services, including foreign products in the country”.
The central banker said lenders are not permitted to force applicants to initiate a deposit to become eligible for the card.
“Issuing cards for bank employees is also prohibited,” he said.
Depositing a specific amount of money with a bank for a year has been the common method employed in Iran’s banking system in recent years for issuing credit cards to customers.
Before the recent scheme kicked off, Iranian banks issued credit cards, debit cards and gift cards, though the first type was not commonly used, as it was limited to VIP customers.
According to Shaparak (the nationwide payment network company), banks issued 330 million cards in the last Iranian year (ended March 20), 1.6 million of which were credit cards.
