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Banking and Insurance in Iran

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Title: Banking and Insurance in Iran  
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Subject: List of economic laws in Iran, Economy of Iran, Bank Maskan, Post Bank of Iran, Bank Pasargad
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Banking and Insurance in Iran

Bank Melli, Saderat and Sepah are Iran's three largest banks.[1]

Following the Islamic Revolution, Iran's banking system was transformed to be run on an Islamic interest-free basis. As of 2010 there were seven large government-run commercial banks.[2] As of March 2014, Iran's banking assets made up over a third of the estimated total of Islamic banking assets globally. They totaled 17,344 trillion rials, or US$523 billion at the free market exchange rate, using central bank data, according to Reuters.[3]

Since 2001 the Iranian Government has moved toward liberalising the banking sector, although progress has been slow. In 1994 Bank Markazi (the central bank) authorised the creation of private credit institutions, and in 1998 authorised foreign banks (many of whom had already established representative offices in Tehran) to offer full banking services in Iran's free-trade zones. The central bank sought to follow this with the recapitalisation and partial privatisation of the existing commercial banks, seeking to liberalise the sector and encourage the development of a more competitive and efficient industry. State-owned banks are considered by many to be poorly functioning as financial intermediaries. Extensive regulations are in place, including controls on rates of return and subsidized credit for specific regions.[4] The banking sector in Iran is viewed as a potential hedge against the removal of subsidies, as the plan is not expected to have any direct impact on banks.[5]

As of 2008, demand for investment banking services was limited. The economy remains dominated by the state; mergers and acquisitions are infrequent and tend to take place between state players, which do not require advice of an international standard. The capital markets are at an early stage of development.[6] "Privatization" through the bourse has tended to involve the sale of state-owned enterprises to other state actors. There is also a lack of sizeable independent private companies that could benefit from using the bourse to raise capital. As of 2009, there was no sizeable corporate bond market.[6][7] Electronic banking in Iran is developing rapidly. The needed $70 million initial capital for the opening of each electronic bank as approved by the Money and Credit Council compares with $200 million required to establish a private bank in the country.[8]


In 1960 the Central Bank of Iran (CBI, also known as Bank Markazi) was established as a banker for the government, with responsibility for issuing currency. In 1972 legislation further defined the CBI’s functions as a central bank responsible for national monetary policy. In the 1960s and 1970s, the expansion of economic activity fueled by oil revenues increased Iran’s financial resources, and subsequently the demand for banking services increased exponentially. By 1977, some 36 banks (24 commercial and 12 specialized) with 8,275 branches were in operation.[9] Their topline revenue has always been trade finance and letters of credit.[10]

After the Revolution, the government nationalized domestic private banks and insurance companies. Bank law was changed under new interest-free Islamic banking regulations. The post-Revolution reduction in economic activity and financial resources required banks to consolidate. By 1982, this consolidation, in conformity with the Banking Nationalization Act, had reduced the number of banks to nine (six commercial and three specialized) and the number of branches to 6,581. Subsequently, the system expanded gradually.[9]

The government began to privatize the banking sector in 2001 when licenses were issued to two new privately owned banks.[6]

In 2011, seven state-owned and private Iranian banks were involved in a purchase state-owned companies.[11][12]

In 2014, Iranian authorities arrested 12 people for embezzlement of more than $4.5 billion (3.6 billion euros) from the Kerman branch of Tejarat Bank from 2009 until their arrest in 2013.[13]

Types of financial institutions

As of 2011, about 80% of the country's wealth was deposited with state banks and the remaining 20% with private banks.[14] Iran's financial institutions are:[14]

Islamic banking

In theory, Iranian banks use "provisional" interest-based transactions but retain the accounting standards of conventional banking.[10] In 2009 Iranian banks account for about 40 percent of total assets of the world's top 100 Islamic banks. Three of the leading four Islamic banks are based there; Bank Melli Iran, with assets of $45.5 billion came first, followed by Saudi Arabia's Al Rajhi Bank, Bank Mellat with $39.7 billion and Bank Saderat Iran with $39.3 billion.[15][16]Iranian banks are still the predominant Islamic banking players, holding seven out of the top 10 ranks and 12 of the 100,” the Asian Banker research group reported.[15] According to CIMB Group Holdings, Islamic finance is the fastest-growing segment of the global financial system and sales of Islamic bonds may rise by 24 percent to $25 billion in 2010.[17]

Commercial banks


Derivatives market

As of 2009, the [10]


As of 2010, the interest rate charged between banks (i.e. interbank rate) is set by the government of Iran.[20] In practice, because the banking system of the Islamic Republic is run on an Islamic interest-free basis, there are no "interest rates" per say but only "provisional profit" lending rates called Mobadala.

Official "provisional" lending rate (aka "Mobadala")

12.0% (2007), 11.5% (2008), 12.0% (2009).[21] Free market rate is 24-25 percent (Aug 2009).[22]

Deposit rates

As of 2010, private banks have acquired 11 percent of the whole money market in Iran.[20]

The provisional profit rates for term investment deposits in private banks and non-bank credit institutions for the year 1387 (2008–2009) & 1390 (2011–2012)[23][24]
Term of Deposits Five-year Deposits Four-year Deposits Three-year Deposits Two-year Deposits One-year Deposits Special Short-Term Deposits Short-Term Deposits

Profit Rate for 1390 (2011) * (percentage)

15 14.5 14 13 12.5 12.5 6-10

Profit Rate for 1387 (2008) * (percentage)

15-18.5 15-18.5 15-18 15-17.75 17-17.5 15-17.25 10-16.5

* The range given covers the different interest rates offered by different banks. In 2010, for the first time in annual policies, the interest payable on bank deposits is similar for both state-owned and privately owned banks. For example, overnight deposits’ interest has been reduced from 12.5% last year to 9% this year. Similarly, 5-year term deposits will now earn 17.5% (per annum) interest, as opposed to 19% the previous year.[25]

As of April 2014, the maximum interest rate for deposits of 90 days or less is set at 10 percent, the maximum rate for deposits of more than 1 year is set at 22 percent, and for other maturities the cap is set at 14 to 18 percent.[26][27]

In April 2015, the Central Bank of Iran reduced the maximum interest rate to 20 percent.[28]

Banking assets and liabilities

Bank Melli, Saderat and Sepah are Iran's three largest banks.[1]

Debts to the Central Bank of Iran

The total debt of 11 state-run banks to the Central Bank of Iran has exceeded $32 billion in 2009, showing a 10-fold increase over the past four years. Bank Melli Iran (aka National Bank of Iran), with nearly $9 billion, had the biggest debt followed by Bank Sepah, Iran's oldest, with about $4.8 billion. Bank Maskan, Bank Keshavarzi, Bank of Industry and Mines and the Export Development Bank of Iran were next with the respective debts of $4.7, $4.1, $3.5 and $1.1 billion. Private sector banks had much lower debts. Bank Parsian, the largest private-run bank, owed about $421 million to the Central Bank. In addition, the collective debt of state-sector companies to the Central Bank has reached $25 billion (2009).[29]

Overdue loans

According to unofficial figures, overdue loans have reached IR175,000bn ($17.8bn, €13.6bn, £11bn), an increase of 75 per cent over three years (November 2008).[30] Plan to inject about $13 billion to recapitalize the banking sector (2008).[31] Ninety individuals have managed to secure collective facilities totaling $8 billion from Iranian banks, with previous $27 billion unpaid loans (2009).[22]

In October 2009, Iran's General Inspection Office informed that Iranian banks have some USD 38 billion of delinquent loans, while they are only capitalized at USD 20 billion. Current average for late debts of Iran's state banks is over 15 percent while the global standard is 3 to 5 percent.[32] Non-performing loans peaked at 17 percent of total loans in 2013, representing almost 10 percent of non-oil gross domestic product, according to the IMF.[10]

Summary of the assets and liabilities of the banking system

In FY 2004 the balance sheet of the banking system showed that total assets and liabilities were US$165 billion, an increase of 226 percent since 1976. In that year, bank assets were divided as follows: private debt, 34 percent; government debt, 16 percent; and foreign assets (90 percent foreign exchange), 22 percent. Liquidity funds (money and quasi-money) accounted for more than 39 percent of total liabilities.[18] The loan-to-deposit ratio was 100.8% in 2011.[33] In 2014 non-performing loan ratio was reported to be around 18%.[34] By 2017, the government is required to pay $12.5 billion to domestic banks to settle debts.[35] A new report shows the assets of Iranian banks increased by a whopping 40% in 2014.

In 2014, the total capital of Iranian banks reached the unprecedented figure of 13.3 quadrillion IRR ($480 billion), an increase of 3.8 quadrillion IRR ($138 billion) over 2013 (i.e. 17% increase over 2013). The deposits in Iranian banks for 2014 reached 5.9 quadrillion IRR ($214 billion) and the loans paid to the public totaled 5 quadrillion IRR ($183 billion). The deposits indicate a growth of 34% while the loans were up 22% compared to 2013.[36]

Assets/Liabilities 2008/09 (billion rials)(1)[37] 2012/13 (billion rials)(1)[38]
Foreign assets 1,216,175.6 2,273,570.6
Claims on public sector: 235,940.9 910,354.4
Claims on public sector - Government 206,925.9 698,989.7
Claims on public sector - Public corporations and agencies 84,613.5 211,364.7
Claims on non-public sector 1,866,550.9 4,138,974.7
Others 1,208,222.0 2,992,062.2
Sub-total 4,582,487.9 10,314,961.9
Below the line items 810,382.2 1,345,559.4
Total assets = total liabilities 5,392,870.1 11,660,521.3
Liquidity: 1,901,366.0 4,606,935.9
Liquidity - Money 1,901,366.0 1,136,717.7
Liquidity - Quasi money 525,482.5 3,470,218.2
Deposits and loans of public sector: 335,620.6 407,779.3
Deposits and loans of public sector - Government 319,542.4 389,635.8
Deposits and loans of public sector - Public corporations and agencies 16,078.2 18,143.5
Capital account 244,659.0 574,643.7
Foreign loans and credits and foreign exchange deposits 610,550.4 1,373,864.5
Import order registration deposits of non-public sector 2.0 2.0
Advance payments on letters of credit by public sector 662.7 1,501.6
Others 1,489,627.2 3,350,234.9
Sub–total 4,582,487.9 10,314,961.9
Below the line items 810,382.2 1,345,559.4

(1) Excludes commercial banks’ branches abroad. As of March 2010, Bank Saderat Iran, Bank Mellat, Tejarat Bank, and Refah Kargaran Bank have been classified as private banks.

As of September 2014,

Assets: The banks and financial institutions, total claims on the public sector (government and governmental institutions) amounted to 929 trillion IRR ($34.8 billion), and total claims on the non-public sector amounted to 5412 trillion IRR ($203 billion). The ratio of the claims on the public sector to the claims on the non-public sector was 17.2% in September 2014, 15.6% one year before, and 13.4% two years before. This trend suggests that the government is using more bank resources than it was previously, and that banks are getting more dependent on the government’s solvency.[39]

Liabilities: Deposits of the non-public sector amounted to 6245 trillion IRR ($234 billion) of which 78.4% is term deposits; this number was 74.5% one year before and 73% two years before. The trend is towards more term deposits and less sight deposits which could be a result of the higher cost of money, the downward trend in the inflation rate, and the stability in the economy. The breakdown of term deposits shows that 44 percent of term deposits are short-term and the rest are long-term. In line with these changes, taking a look at the yield curve for the last 5 years shows that the right side of the curve has moved upward significantly and the left side has become steeper, making long-term deposits more attractive.[39]

Banking reserves

The ratios of the banks' legal reserves in the Central Bank in 2009 were as follows:[23]

  • Current deposit: 20 percent
  • Interest-free-loan deposit: 10 percent
  • Short-term deposit: 17 percent
  • One-year deposit: 17 percent
  • Two- and Three-year deposit: 15 percent
  • Four-year deposit: 13 percent
  • Five-year deposit: 11 percent
  • Other deposits: 20 percent

According to Article 14 of the Monetary and Banking Law of Iran, the CBI is authorized to determine reserve requirement ratio within 10 to 30 percent depending on banks’ liabilities’ composition and field of activity.

Sectoral allocation of banking facilities

In 2008, Iranian banks extended 70 trillion rials ($7 billion) to quick-yield economic enterprises.[40] According to Article 14 of the Monetary and Banking Law of Iran, the CBI can intervene in and supervise monetary and banking affairs through limiting banks, specifying the mechanisms for use of funds and determining the ceiling of loans and credits in each sector.

Sector Share in total credits (%) - 2009 [23] Share in total credits (%) - 2010 [25]
Agriculture, water, and processing industries 25 25
Manufacturing and mining 33 35
Construction and housing 20 20
Trade and services 15 20
Export 7 -

OTC market

Since 2009, Iran has been developing an over-the-counter (OTC) market for bonds and equities called Farabourse. Its shareholders include the Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%). As of July 2011, Farabourse has a total market capitalisation of $20 billion and a monthly volume of $2 billion.[41]

In 2010, 5.5% of the Mobile Telecommunication Company of Iran shares were offered on the Iranian Over-The-Counter (OTC) market, at a value of $396 million.[42] This was the largest IPO-to-date in the Iranian OTC equity market. In 2011, Pardis Petrochemical Co., the largest producer of urea and ammonia in the Middle East, Amir Kabir Petrochemical Co., Pasargad Bank, Yazd Alloy Steel Co. and Ravan Fanavar Co (a car auto part manufacturing company) went all public.[43][44]

Bond market

Participation papers

An important development for the Iranian capital markets was the opening of a fixed income market for the first time in 2009 with the issuance of term deposit certicates (traded OTC). The only type of tradable Islamic bond in Iran is the "Participation Paper". These are typically short term bonds (1–3 years) and have the same economic characteristics as fixed-rate conventional corporate bonds. For participation loans (known as Musharakat (in Persian) or Musharakah (in Arabic)) the interest rate charged by the banks is dependent on the profitability of the project for which financing is required (as in project finance). In April 2011, the government's plan was to limit the maximum rate at 20%.[43]

Profit and awards accrued to participation papers are tax exempt.[23] The Central Bank must obtain approval from the Majlis in order to issue participation papers.[4] As at 2012, regulations for fixed income instruments oblige that a market maker always buys back the papers from the sellers in the secondary market at par value if there are no other buyers present.[45] With participation papers, at the end of the project the profit must be calculated and can then be distributed among the shareholders. During that time, dividends or interest can be paid.

Around nine billion euros worth of participation bonds in foreign currency and Iranian rials have been allocated for different projects in the Oil Ministry in 2010.[46][47] Three billion euros will be allocated to the South Pars gas field and the rest will go to oil field development projects.[46]

  • Bank Mellat's June 2010 offering of bonds worth 250 million euro overseas is considered the third stage of offering a total of one billion euro in bonds designed to help finance development of phases 15-18 of Iran’s South Pars natural gas. The bond has a maturity of three years and an interest rate of eight percent.[48]
  • New issues in July 2010 included $300 million of papers by the Tehran Municipality and $100 million of participation papers by the Ministry of Energy. The vast majority of these participation papers pay coupon rates of 2-3% above bank rates.[49]
  • Also in July 2010, Iran & Shargh Leasing Co. (the first non-bank entity to list a fixed income product on the OTC market) listed $8 million worth of participation papers.[49]
  • In August 2010, Iran sold about $500 million worth of bonds for the first development phase of the gas deposit. The three-year bonds, yield 16 percent.[50]
  • In November 2010, Iran will sell rial bonds worth $2.3 billion to finance the second development phase of its South Pars gas field.[50] The bonds will be sold through Bank Saderat Iran, Bank Melli Iran and Pars Oil and Gas Co. Previously, POGC had sold $1.5 billion worth of papers for the same purpose. These papers pay a coupon of 16% per annum and have a tenure of 4 years.[51]
  • In November 2010 Keshavarzi Bank listed $100 million of one-year tradable certificate of deposit (CD’s) with an annual interest rate of 15%.[51]
  • Iran’s national budget for 2012-13 has envisaged issuing €12.5 billion in bonds for financing domestic oil projects.[52]

For up-to-date amounts and list of issuing agencies, see CBI's annual review(s) here.

Publicly Purchased Participation Bonds by the Issuing Authority in 2010/2011[53]
Issuer Participation Papers Purchased(billion Rials) Percentage from the Total
Municipalities 14,613 9
Government Corporations 70,841 45
Maskan Bank 71,351 46
Total 156,805 --


Sukuk is an Islamic Fixed income instrument, which looks similar to an asset-backed debt instrument. As of July 2011 and for the first time since the law was passed 3 years ago, Iranian companies such as AAOIFI in 2007. But in Iran's debt market, salam is a common form of sukuk.[10]

List of Iranian banks

In 2010, The Banker listed 13 Iranian banks in the "top 1,000 banks in the world".[55] In 2005 the Iranian banking system consisted of a central bank, 10 government-owned commercial and specialized banks, and four private commercial banks. In 2004 there were 13,952 commercial bank branches, 53 of which were foreign branches. Specialized banks had 2,663 branches.[56]

Top 5 Iranian Banks - 2012 ranking[57]
Bank Score (Iran) Score (Global) Banking Power/Capital Base ($ Million) Banking Power/Capital Base (% Change) Total Assets ($ Million) Total Assets (Score) Total Assets (% Change) Credibility/Capital to Assets Ratio (%) Credibility/Capital to Assets Ratio (Score) Performance/Return on Capital (%) Performance/Return on Capital (Score) Return on Assets (%) Return on Assets (Score)
Bank Saderat Iran 1 259 3,109 4.46 54,877 3 14.22 5.66 7 25.63 8 1.45 7
Pasargad Bank 2 266 3,057 147.7 18,057 8 47.41 16.93 3 20.69 9 3.5 2
Bank of Industry and Mine 3 310 2,550 -2.16 9,432 10 12.1 27.04 2 3.2 13 0.87 10
Mellat Bank 4 320 2,402 NM 68,370 2 NM 3.51 12 32.59 15 1.14 9
Tejarat Bank 5 350 2,103 13.6 45,188 4 18.65 4.66 9 27.14 7 1.26 8

Commercial government-owned banks

No. Bank name[58] Bank name (in Persian) Year founded No. branches (Domestic) No. branches (International)
1 Bank Melli Iran بانک ملی ایران 1928 3,300[40]
2 Bank Sepah بانک سپه 1925 2000[59]
3 Post Bank of Iran پست بانک ایران 2006 400[59]

Specialized government-owned banks

No. Bank name[60] Bank name (in Persian) Year founded No. branches (Domestic) No. branches (International)
1 Keshavarzi Bank (Agriculture) بانک کشاورزی 1933 1,900.[59]
2 Bank Maskan (Housing) بانک مسکن
3 Bank of Industry and Mine بانک صنعت و معدن 65[59]
4 Export Development Bank of Iran بانک توسعه صادرات ايران 1991 34[59]
5 Cooperative Development Bank/Tose'e Ta'avon Bank بانک توسعه تعاون 2009[61]
6 Gharzolhasaneh - Mehr Iran Bank بانک قرض الحسنه مهر ایران

Non-government-owned banks

No. Bank name[62] Bank name (in Persian) Year founded No. branches (Domestic) No. branches (International)
1 EN Bank بانک اقتصاد نوین 2001 145
2 Parsian Bank بانک پارسیان 2001 160
3 Karafarin Bank بانک کار آفرین 2001 52
4 Saman Bank بانک سامان 2002 123[59]
5 Bank Pasargad بانک پاسارگارد 2005 296[59]
6 Sarmayeh Bank بانک سرمایه 2005
7 Sina Bank بانک سینا 2009 260[25]
8 Ayandeh Bank[63] بانک آینده 2009
9 City Bank بانک شهر 2010 131
10 Bank Day بانک دی 2010 [40]
11 Ansar Bank بانک انصار 2010
12 Tejarat Bank بانک تجارت 1978 1887
13 Refah Bank بانک رفاه 1960 1128
14 Bank Saderat Iran بانک صادرات ايران 1952 3300 30[59]
15 Bank Mellat بانک ملت 1980 1820[59][64][65] 4[66][67]
16 Hekmat Iranian Bank بانک حکمت ایرانیان 2010
17 Tourism Bank بانک گردشگری 2010
18 Iran Zamin Bank بانک ایران زمین 2011
19 Middle East Bank بانک خاورمیانه 2012
20 Gharzolhasaneh - Resalat Bank بانک قرض الحسنه رسالت 2014
21 TTBank بانک توسعه تعاون 2009 420
22 Ghavamin Bank بانک قوامین 2000 [68]

Investment institutions

No. Institution name Institution name (in Persian) Year founded No. branches (Domestic) No. branches (International)
1 Ghadir Investment Company سرمایه‌گذاری غدیر 1991
2 AminIB[69] تأمین سرمایه امین 2008
3 EN Bank[69] شرکت سرمایه گذاری بانک اقنصاد نوین 1994
4 Pasargad Bank[69] شرکت سرمایه گذاری بانک پاسارگاد 2008
5 Turquoise Partners[69] شرکت سرمایه گذاری فیروزه 2005
6 Mofid Securities Co. شرکت کارگزاری مفید 1994
7 MellatIB[69] تأمین سرمایه بانک ملت 2011

Presence abroad

A number of Iranian banks have established branches abroad, several of which have been subject to program of consolidation. Thus, in recent years, Bank Saderat has acquired the Iran Overseas Investment Bank (from Bank Mellat), and branches of Bank Melli and the Bank of Industry and Mines in London to form Saderat International. In addition, the London branches of Bank Tejarat and Bank Mellat merged to form Persia Bank.

Venture capital

In recent decades Iran has shown an increasing interest in various entrepreneurship fields, in higher educational settings, policy making and business. Although primary and secondary school textbooks do not address entrepreneurship, several universities including Tehran University and Sharif University, offer courses on entrepreneurship to undergraduate and graduate students.[70][71][72][73][74]

According to the 2012 Global Entrepreneurship Monitor report, the rate of entrepreneurship in Iran among men fluctuated between 14 and 20% while the same rate for women (between the ages 18 to 64) fluctuated from 4 to 6% between 2008 and 2012 (& while their overall economic participation makes up only 13% of the entire economy).[75] In 2012, Iran scored 67 among 177 countries according to the Global Entrepreneurship and Development Index.[76] Some of this activity falls under the informal economy.

Sarava is Iran's first venture-capital fund.[77] Iran’s fifth economic plan (2010–15) has allotted $3 billion to the Initial Investment Technology Fund, which is designed to support new university graduates who want to develop their ideas and carry out innovative projects.[78] The Innovation and Prosperity Fund was also established in March 2011 to support knowledge base companies & foreign direct investment in Iran.[79][80][81] As of 2014, Canton Hermidas Private Equity and Swicorp are the two foreign based private equity funds that have a focus on Iran.[34] Foreign companies are beginning to explore ways to start technology companies in Iran or allow their services to become available in the country.[82] Avatech is one of Iran's well-known start-up incubator located at Tehran University.[83]

Foreign banks

According to CBI, 5 offices of foreign banks[84] (as of May 2012) operate in Tehran and Kish free trade zone.

Article 44 (fifth clause) of the Iranian Constitution Law had heretofore placed banking activities exclusively in the hands of government. In tandem with the Law on Usury Free Banking Operations, these two measures effectively blocked foreign banking operations from conducting business in mainland Iran. In 2009 the Constitution was to be amended to allow foreign banks to operate normally in mainland Iran.[85]

As of 2015, there is no limitation for the activities of foreign banks in Iranian free economic zones. They may also open branches and representative offices in mainland or hold 40% shares of an independent unit.[86]

Foreign branches

The minimum capitalization for establishing a foreign bank branch in Iran is euro 5m.[87] A handful of foreign bank branches and representative offices extant in the country were allowed to undertake administrative and coordination activities but were not permitted to open customer accounts inside the territory of mainland Iran, receive deposits or extend normative facilities.[88]

Until now, foreign banks in Iran have acted as the bridge between foreign companies from the same mother country in the host country. Foreign companies learned of Iran's economic and investment opportunities through these foreign banks in the country.

In 2010, the Iranian government lifted a cap on the percentage of shares in Iranian banks that can be owned by a foreign individual or company. The original law, which applied to both Iranians and foreigners, restricted the amount of shares in a bank that a single company could own to 10 percent and an individual to 5 percent. Iranian ownership of banks is still subject to the limits.[89]

According to the new rules, only the Iranian government has the authority to form joint banks with foreign entities.[90] Foreign entities can now hold over ten percent of the shares in joint banks with Iran but their shares cannot exceed more than 49 percent.[91] Under the same provisions, foreign individuals and entities that have at least 51 percent Iranian ownership shall be considered Iranian companies.[90]

Mainland activities

For the first time since the 1979 Islamic Revolution, Iran is set to allow foreign banks to establish branches in the country and engage in normal banking operations.[87]

In 2008, Bank Markazi (the central bank) formally officiated over the opening of Iran's first foreign bank branch in the capital, Tehran. The Iran-Europe Commercial Bank, which is registered in Hamburg, Germany, but is majority owned by the Bank of Industry and Mines of Iran. The second foreign bank to be created in Iran was the joint Iranian-Venezuelan bank. As of 2010, similar projects exist with countries such as Russia, Belarus and Egypt.[92][93][94]

In 2009, four US banks, including Citibank and Goldman Sachs applied for opening a branch in Iran. The banks made a formal request to the Central Bank of Iran (CBI) to establish a branch. If the Majlis and CBI approve their request, these four banks will set up a temporary branch in an Iranian free trade zone. And if they can work according to the Iranian banking law (i.e. usury-free banking), they will also be allowed to open branches in Tehran and other cities.[95][96]

In 2010, Tehran Times reported [instead?] that the banks filing the requests for working in Iran were from "states in the Persian Gulf and the Middle East regions as well as Asia".[97]

Free trade zones

Foreign banks could operate in Iran's free trade zone areas for many years and there are currently three such banks on Iran's Kish Island in the Persian Gulf. Iran’s Majlis (parliament) has ratified the bill for the establishment of domestic-foreign joint banks and insurance companies in free trade zones.[98]


The United States is attempting to isolate Iran from the international financial and commercial system in an effort to promote policy change in Iran regarding its nuclear program and purported terror financing.[4]

In 2006, Swiss banks UBS and Credit Suisse as well as ABN AMRO and HSBC - decided to end their operations in Iran. UBS announced that it had stopped doing business with Iran because of the company's economic and risk analysis of the situation in the country. UBS stated that it will no longer deal with individuals, companies or state institutions such as the Central Bank of Iran.[99]

Bank Melli, Saderat and Sepah are Iran's three largest banks. They have been hit with UN and US sanctions over the past two years, over alleged links with Iran's nuclear and missile programmes (2008).[1] Malaysia and U.A.E are also cooperating with the United States in implementing international sanctions against Iran.[100]

Insurance industry

The Central Insurance (Bimeh Markazi Iran) company is in charge of regulating this sector in Iran. Five [101][102]

In 2006 the market share for private insurance companies stood at 54% and 46% for governmental insurance companies.[103] At the end of 2008, there were 20 insurance firms active in the market, only 4 of which were state-owned (with a 75% market share). As of 2014, twenty-five insurance companies are active in Iran and all, except one, are privately owned.[104] Parsian Insurance became the largest privately owned company to be listed on the Tehran Stock Exchange in 2010. Parisan is the third largest insurance provider in Iran.[51]

In 2008, the total insurance premiums generated in Iran were $4.3 billion. This is less than 0.1% of the world’s total, while Iran has approximately 1% of the world’s population. The insurance penetration rate is approximately 1.4%, significantly below the global average of 7.5%. This underdevelopment is also evident in product diversity.

Approximately 60% of all insurance premiums are generated from car insurance. There are about 14 million vehicles in Iran and 90 percent of them are insured (2012).[105] Of the 10 million motorcycles that operate on Iran's roads only 2 million are insured.[105] Also, 95% of all premiums come from general insurance contracts and only 5% relate to life products (against world average of 58% for life insurance in 2011).[103] One of the defining characteristics of the economy is entrenched high inflation (and expectations) thanks to persistent monetisation of fiscal deficits. This produces an environment in which no prudent person would enter into a long-term savings contract. According to Business Monitor International, unless and until economic policies in Iran change radically, the reality of the insurance sector will fall a long way short of its potential.[106]

Blood money was $67,500 in 2011, down from $90,000 a year before.[103][107]

Since 2012, Iran is insuring its own fleet of oil tankers because of international sanctions.[105]

Payout ratios have shown consistent growth over the years. Last year, the industry average payout ratio was 86%. Iran has 2 re-insurers. Insurance premiums come to just below 1% of GDP. This is partly attributable to low average income per head.[108] In 2001/02 third-party liability insurance accounted for 46% of premiums, followed by health insurance (13%), fire insurance (around 10%) and life insurance (9.9%).[108]

The Central Insurance of Iran is currently in the process of implementing some deregulation within the industry and migrating from a tariff-based regulation regime to a prudential based one (such as the Solvency regime), which is in line with the internationally accepted standards.[42]

See also


  1. ^ a b c
  2. ^
  3. ^
  4. ^ a b c
  5. ^ Turquoise Partners: "Iran Investment Monthly" - October 2010 Retrieved October 30, 2010
  6. ^ a b c
  7. ^
  8. ^
  9. ^ a b  This article incorporates text from this source, which is in the public domain.
  10. ^ a b c d e
  11. ^
  12. ^
  13. ^
  14. ^ a b
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  17. ^ a b
  18. ^ a b  This article incorporates text from this source, which is in the public domain.
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  20. ^ a b
  21. ^|Country Briefings: Iran
  22. ^ a b
  23. ^ a b c d
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  25. ^ a b c
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  34. ^ a b
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  39. ^ a b
  40. ^ a b c [1]
  41. ^ [2]
  42. ^ a b
  43. ^ a b
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  46. ^ a b
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  51. ^ a b c
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  59. ^ a b c d e f g h i
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  68. ^ Ghavamin Bank
  69. ^ a b c d e
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  87. ^ a b
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  90. ^ a b Rooz Online: Iranian Banks Under Sanctions - Government Looking Towards Foreign Banks Retrieved Aygust 2, 2010
  91. ^ PressTV: Iran's foreign banks law put into effect. Retrieved August 2, 2010
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  96. ^ [3]
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  102. ^ [4]
  103. ^ a b c
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  105. ^ a b c
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  108. ^ a b

External links

  • History of banking in Iran
  • List of banks and insurance companies in Iran (with brief description and contact details as of 2011)
Statistics, balance sheets, analysis & banking laws
  • Islamic Republic of Iran: IMF Staff Report – Statistics on the banking sector and macro-economic projections by the International Monetary Fund (March 2010)
  • Central Bank of Iran – Detailed statistics about Iran's economy and sectors, including annual reviews
  • Trade Promotion Organization of Iran – Many useful information about trade, FDI, economic reports, customs, laws, statistics, links and opportunities for investors in Iran (Affiliated to Iran's Ministry of Commerce)
Specialized reports
  • Iran Banking and Financial Market Handbook, ISBN 1-4387-2384-9, International Business Publications, USA (2010)
  • Economist Intelligence Unit: Financial Services Report - Iran (2010)
  • BMI: Iran Commercial Banking Report (56-page report, 2009)
  • BMI: Iran Insurance Report (72-page report, 2012)
  • PressTV:
    • A close look at Iran's banking: Part I (2010) on YouTube
    • A close look at Iran's banking: Part II (2010) on YouTube
    • A close look at Iran's banking: Part III (2010) on YouTube
    • Iran's Banking System: Part I (2010) on YouTube
    • Iran's Banking system: Part II (2010) on YouTube
    • Iran's Banking System: Part III (2010) on YouTube
    • Banking System in Iran (2011) on YouTube
    • Private insurance companies in Iran (2011) on YouTube
    • Reform in Iran's banking system (2012) on YouTube
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