The Central Bank of Iran announced new guidelines based on which banks and credit institutions are allowed to issue credit cards holding up to 2 billion rials ($7,400).
As per previous procedures, credit cards belonged to three categories of 100 million, 300 million and 500 million rials.
According to a press release posted on CBI’s website, “the rise in credit card ceiling is in line with the regulator’s measures to adapt rules governing credit card usage with new conditions, [for example rising inflation] and facilitate household and business finances”.
As per the guidelines, the maximum repayment deadline has been extended from the previous 36 months to 60 months. Reimbursement could be done either in lump sum, or in installments.
The CBI says it is trying to institutionalize the use of credit cards as a resourceful and accessible alternative to microloans.
Iranian banks issue credit cards, debit cards and gift cards, though the first type is a rarity limited to VIPs. Banks pay huge amounts in loans, but small loans account for a small part of the total lending.
As per regulations, banks can offer only one credit card to each customer, though customers can hold credit cards of multiple banks as long as the maximum credit does not exceed 2 billion rials.
Cardholders will be given 12-36 months to settle their bills at a maximum 18% lending rate set by the Money and Credit Council.
Despite the tiny share of credit cards in Iran, the banking industry is now showing interest in this field. Credit cards accounted for 380,388 of the total 212.9 million active bank cards in the sixth fiscal month ending Sept. 22, according to data released by Shaparak, the body in charge of supervising Iran's domestic payment network.
State-run and semi-private banks were the main issuers of credit cards last month. Bank Melli Iran was the issuer of 64% of total credit cards, followed by Bank Sepah 13.2% and Bank Mellat 8%.
Earlier, Davoud Mohammad-Beigi, a CBI official, said the infrastructure for issuing credit cards is ready and those interested will be eligible after their financial credibility is confirmed.
The IT Department of CBI is also working on a platform to help banks determine the credibility of customers, which could encourage banks to expand the issuance of credit cards.
On the merits of credit cards, the CBI said the retail payment instrument has the potential to help curb demand for loans, raise the efficacy of loans and allow people from various social strata to access bank facilities.
