Active presence of foreign banks could help reduce transaction costs including lending rates that have increased exponentially over the past few years, a senior official with the Central Bank of Iran said.
Lower transaction costs, meanwhile, can help reduce the finished cost of locally manufactured products, promote and diversify banking services, Hussein Yaghoubnia, director general for international affairs of the bank told the Persian daily Ta’adol.
The official noted that Kish Free Trade Zone could potentially act as a hub for international financial services in light of the investment-friendly regulations that the country now offers and said “Despite the incentives and tax exemptions offered to foreign investors by some neighboring countries such as UAE, heavy overheads and other requirements such as the necessity of having a local partner limits the operations of foreign investors in those states.”
Foreign banks in Iran can easily start business in FTZs with 100% ownership, partner with Iranians or purchase shares in local banks, he said.
Apart from European countries, banks from other countries namely Russia, South Korea, China and even Japan have expressed interest in Iran’s financial market. The regulator, however, will not allow foreign banks that are under international sanctions for allegedly illegal activity and money laundering to enter the country, according to Yaghoubnia.
The official did not rule out the possibility of Kish Free Trade Zone transforming into a new financial hub in the Middle East in the future. “Russian banks are already in talks to set up business in Kish FTZ.”
On the sidelines of the 2nd Kish Invex 2015 in mid-November, the governor of Central Bank of Iran, Valiollah Seif had announced plans to launch an international financial center in Kish after economic sanctions against the country are lifted.