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Iranian Banks' L/C Boom in Post-Sanctions Era
Iranian Banks' L/C Boom in Post-Sanctions Era

Iranian Banks' L/C Boom in Post-Sanctions Era

Iranian Banks' L/C Boom in Post-Sanctions Era

The Ministry of Economy has published the details of letters of credit and banking guarantees that Iranian banks allocated over the past few years, which marks the progress of these banks after economic sanctions against Iran were lifted.
Despite the fact that half of President Hassan Rouhani’s term was spent under heavy sanctions that affected the banking system directly, banks always tried to benefit from foreign exchange earnings and help the country’s international trade by opening L/Cs for businessmen and issuing banking guarantees.
The process picked up considerable pace when the sanctions were eased after the implementation of the Joint Comprehensive Plan of Action–as Iran’s nuclear deal with world powers is formally called–and Iranian banks were declared sanctions-free.
According to the ministry’s report, Bank Melli Iran allocated 154 letters of credit worth $42.71 million over a four-year period (2013-16).
A total of 18 L/Cs worth more than $7.8 million were opened in 2013 but the figure for next year dropped to around $2 million. In 2015, L/Cs bounced back to $12.7 million and in 2016, with JCPOA in action, BMI opened 30 L/Cs valued at $6.8 million during the first six months of the Iranian fiscal year (March 21-Sept. 21, 2016) and estimates the figure to have reached 100 L/Cs worth $20 million by March 20, 2017.
During 2013-16, Bank Keshavarzi opened 19,253 L/Cs worth over $10.5 billion. It also played an important role in issuing 21 bank guarantees valued at $15 million. From March to Sept. 2016, the bank opened 5,840 letters of credit worth over $2.8 billion and the figure was predicted to reach $3 billion by the end of the Iranian fiscal year (March 20, 2017).
Bank Mellat also issued 32 export guarantees worth $15.4 million and four import guarantees worth $13.5 million during the six-month period, while they planned to increase the number of export guarantees to 63 worth $87.5 million and import guarantees to 16 worth $35 million.
Tejarat Bank issued over 4,500 L/Cs worth $1.8 billion during 2013-15 but they increased in the first six months of the Iranian year (starting March 20, 2016) to 1,103 L/Cs. This figure was predicted to reach 2,300 by March 20, 2017.
Export Development Bank of Iran–the country’s Exim bank–also did pretty well by opening 550 L/Cs and issuing more than 1,750 bank guarantees during 2013-15 to emerge as one of the main forces in the Iranian economy.  

 

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