Credit Cards

Iran plans new credit card scheme to support local products

Financial Tribune- Iran’s banking system is now preparing a new credit card scheme for supporting locally produced goods, following a previous plan that failed to take off.

“In the meetings that we had with state-owned and private banks for supporting Iranian products, it was decreed that banks consider the policies of allocating loans through credit cards for the specific purpose of purchasing Iranian goods,” Kourosh Parvizian, the head of the Association of Private Banks and Credit Institutions, told Fars News website.

According to Parvizian, who is also the chief executive of the private Parsian Bank, banks have begun the process of clinching deals with local companies to launch the scheme and this includes his bank as well, which is doing it through its leasing arm, Parsian Leasing Company.

Minister of Industries, Mining and Trade Mohammad Shariatmadari has also confirmed the new credit card package. He said on Wednesday that the package, designed “in the style of developed countries”, is currently being discussed in the Money and Credit Council, Iran’s main financial decision-making body.

As for the interest rates on facilities allocated as part of the credit card scheme, Parvizian said the rates will differ based on the deals reached between banks and local companies.

“Through discounts from the companies, the loan interest rates can even be set at lower than [the current banking system rates of] 18%,” he added.

The official noted that the scheme will be implemented both through the banking system and leasing companies, and said as no specific ceiling has been set, banks will be able to allocate as much resources to the scheme as they wish.

Iran’s banking system launched a credit card scheme about two years ago, which was specifically aimed at providing microloans to people wishing to purchase goods. The scheme included gold, silver and bronze cards that would contain 500 million rials ($11,900), 100 million rials ($2,380) and 50 million rials ($1,190) in loans, but the plan was discontinued after a cold public reception.

But since the current Iranian year that began on March 20 has been named the “Year of Support for Iranian Products” by Leader Ayatollah Seyyed Ali Khamenei, the government seems determined to revive the scheme within a new framework.