Following the Iranian Revolution, the Iranian banking system was changed to run on the basis of interest-free Islam. In 2010 there were seven large commercial banks managed by the government. As of March 2014, Iranian banking assets account for more than a third of the total assets of Islamic banking in the world. They total 17344 trillion real, or US $ 523 billion in free market exchange rates, using central bank data, according to Reuters.
Since 2001, the Iranian Government has moved towards liberalizing the banking sector, although progress has been slow. In 1994 Bank Markazi (central bank) authorized the creation of a private credit institution, and in 1998 the foreign banks in charge (many of whom have established representative offices in Tehran) to offer full banking services in the Iran free trade zone. The central bank seeks to follow this with the recapitalization and partial privatization of existing commercial banks, seeking to liberalize the sector and encourage the development of more competitive and efficient industries. State-owned banks are considered by many to be not functioning properly as financial intermediaries. Extensive regulations are already in place, including controls on returns and subsidized credit for a particular region. The banking sector in Iran is seen as a potential hedge against the abolition of subsidies, because the plan is not expected to have a direct impact on banks.
In 2008, demand for investment banking services was limited. The economy remains dominated by the state; mergers and acquisitions are rare and tend to occur between state players, who do not require international standard advice. Capital markets are at an early stage of development. "Privatization" through the stock exchange tends to involve the sale of state-owned companies to other state actors. There is also a lack of considerable independent private firms that can take advantage of using the exchanges to raise capital. In 2009, there was no large corporate bond market. Electronic banking in Iran is growing rapidly. A $ 70 million initial capital is required for the opening of any electronic bank as approved by the Money and Credit Council compared to the $ 200 million required to establish a private bank in the country.
Video Banking and insurance in Iran
Histori
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 the law further defined the function of CBI as the central bank responsible for national monetary policy. In the 1960s and 1970s, the expansion of economic activities fueled by oil revenues increased Iranian financial resources, and then demand for banking services increased exponentially. In 1977, about 36 banks (24 commercial and 12 special) with 8,275 branches operated. Their topline income has always been a trade finance and a letter of credit.
After the Revolution, the government nationalized domestic private banks and insurance companies. The Bank's laws are subject to Islamic rules of interest-free Islamic banking. The post-revolutionary decline in economic activity and financial resources requires banks to consolidate. In 1982, this consolidation, in accordance with the Law on the Nationalization of Banking, reduced the number of banks to nine (six commercial and three special) and the number of branches to 6,581. Furthermore, the system is expanded gradually.
The government began to privatize the banking sector in 2001 when the license was issued to two new private banks.
In 2011, seven Iranian state-owned and private banks were involved in embezzlement cases worth 2.8 billion dollars, involving forging documents to secure multibillion-dollar loans and buying state-owned companies.
In 2014, the Iranian authorities arrested 12 people for embezzling more than $ 4.5 billion (3.6 billion euros) from Bank Tejarat branch from 2009 until their capture in 2013.
Maps Banking and insurance in Iran
Type of financial institution
In 2011, about 80% of the country's wealth is kept in state banks and the remaining 20% ​​with private banks. Iranian financial institutions are:
- Bank
- Finance & amp; Credit Agencies
- "Gharzolhasaneh" Funds (Islamic non-profit grants - reflecting the many functions of small-scale credit providers)
Islamic Banking
In theory, Iranian banks use "temporary" interest-based transactions but maintain conventional banking accounting standards. In 2009, Iranian banks accounted for about 40 percent of the total assets of 100 Islamic banks in the world. Three of the four leading Islamic banks are there; Iran's Bank Melli, with assets of $ 45.5 billion comes first, followed by Al-Rajhi Bank of Saudi Arabia, Bank Mellat with $ 39.7 billion and Iranian Saderat Bank with $ 39.3 billion. " Iranian banks are still the dominant Islamic banking players, holding seven of the top 10 ranks and 12 out of 100, " Asian Banker research group reported. According to CIMB Group Holdings, Islamic finance is the fastest growing segment of the global financial system and the sale of Islamic bonds is expected to increase 24 percent to $ 25 billion in 2010. However, most of Iran's financial resources are directed at trade, smuggling and speculation rather than production and manufacturing.
Commercial bank
Commercial banks are authorized to receive checks and savings and investment time deposits, and they are allowed to use promotional methods to withdraw deposits. Term investment deposits may be used by banks in various activities such as joint ventures, direct investments, and limited trade partnerships (except to guarantee imports). However, commercial banks are prohibited from investing in the production of luxury and unimportant consumer goods. Commercial banks may also engage in official banking operations with state-owned institutions, government-affiliated organizations, and public companies. Funds received as commissions, fees, and returns are bank earnings and can not be shared among depositors. According to the Iranian Central Bank, the financial sector has about $ 260 billion of liquidity, or 65% of Iran's economic GDP.
Market Derivatives
In 2009, the Iranian oil exchange was the spot market for petrochemical products primarily, with plans to introduce sharia future contracts for crude oil and petrochemicals in the future. Trading is done through licensed private brokers registered at the Securities and Exchange Organization of Iran. With the help of the Bahrain-based International Islamic Finance Market and the New York-based International Private and Derivatives Association, the global standard for Islamic derivatives was set in 2010. "The Master Hedging Agreement" provides a structure whereby institutions can trade derivatives such as value exchange and currency. While the standards of the Bahrain-based Accounting and Audit Organization for Islamic Financial Institutions (AAOIFI) are widely followed around the world, they are not enforced in Iran.
Rates
In 2010, interest rates charged between banks (ie interbank interest rates) were established by the Iranian government (by the Iran Banking Association Board). In practice, since the Islamic Republic's banking system is run on the basis of no Islamic interest, there is no "interest rate" solely but only a "temporary interest rate" called "Mobadala".
Official provisional "borrowing rates" alias "Mobadala")
12.0% (2007), 11.5% (2008), 12.0% (2009). The free market rate is 24-25 percent (August 2009).
Deposit rates
In 2010, private banks have gained 11 percent of all money markets in Iran.
* The given range includes different interest rates offered by different banks. In 2010, for the first time in the annual policy, interest paid on bank deposits was similar for both state-owned and private banks. For example, overnight deposit interest has been reduced from 12.5% ​​last year to 9% this year. Similarly, 5-year time deposits will now earn interest of 17.5% (per annum), compared to 19% a year earlier.
In April 2014, the maximum interest rate for deposits of 90 days or less is set at 10 percent, the maximum rate for deposits over 1 year is set at 22 percent, and for other periods the limit is set at 14 to 18 percent.
In April 2015, the Iranian Central Bank reduced its maximum interest rate to 20 percent.
In June 2016, bankers agreed to offer a maximum 15 percent interest on one-year deposits, down from the previous 18%. The value of short-term deposits is set at 10 to 14 percent.
Bank assets and liabilities
Bank Melli, Saderat and Sepah are the three largest banks of Iran. The government plans to remove government arrears, recapitalize banks and strengthen oversight (2016). The IMF estimates public debt could be as high as 40% of GDP after government arrears to the private sector are recognized.
Debt to Iran Central Bank
Since 2002, the government has been banned from borrowing from the central bank directly (eg to finance the budget deficit). Instead, it is permitted to borrow from commercial banks which in turn borrow from the central bank, and inflame their own balance sheets.
The total debt of 11 state-run banks to the Iranian Central Bank has surpassed $ 32 billion in 2009, showing a 10-fold increase over the past four years. Iran's Bank Melli (aka National Bank of Iran), with nearly $ 9 billion, has the largest debt followed by Bank Sepah, the oldest in Iran, with about $ 4.8 billion. Bank Maskan, Keshavarzi Bank, Industrial and Mining Bank and the next Iranian Export Development Bank with debts of $ 4.7, $ 4.1, $ 3.5 and $ 1.1 billion, respectively. Private sector banks have a much lower debt. The Parsian Bank, the largest private bank, owes about $ 421 million to the Central Bank. In addition, the collective debt of state-owned enterprises to the Central Bank has reached $ 25 billion (2009).
Bank debt to central banks reached 836.1 trillion real ($ 27.3 billion at official exchange rate) at the end of the fiscal year ending in March 2016. Private bank debt totaled $ 4.06 billion. Five special banks, all managed by the state, contributed $ 18.7 billion (or 68.5 percent) of the banking sector debt to the central bank in March 2016.
Debt maturity
According to unofficial figures, loans that have matured have reached IR175.000bn ($ 17.8bn, EUR13.6bn, Ã, Â £ 11bn), a 75 percent increase over three years (November 2008). Plans to inject about $ 13 billion to recapitalize the banking sector (2008). Ninety people have managed to secure a collective facility of $ 8 billion from Iranian banks, with a $ 27 billion unpaid loan before (2009).
In October 2009, the Office of the Inspection General of Iran informed that Iranian banks have about 38 billion US dollars of bad loans, while they are only capitalized of USD 20 billion. The current average for Iranian government banks' late debts is over 15 percent while global standards are 3 to 5 percent. Bad loans peaked at 17 percent of total loans in 2013, representing nearly 10 percent of non-oil gross domestic product, according to the IMF.
Regarding corruption and cronyism in the banking sector, Attorney General Tehran Abbas Jafari Dowlatabadi said in 2016:
"Banking has become a safe place in all cases like corruption to hatch, with high-level management turning a blind eye to the ongoing corruption at the organizational level in and or actively participating to gain their illegal interests [..] 11 banks have paid a sum of $ 2.5 billion, with 1287 people filing for bankruptcy, the deadlock to be solved requires three fundamental approaches, the first remains with the bank to adjust the tight roles and criteria for lending, the director of the bank should be at the forefront of the fight for corruption, no entrepreneurs who run a business must receive a great deal without providing sufficient guarantees, cronyism should be abolished and ineligible evidence should not be lent as individual credentials as receiving loans. "
Summary of banking system assets and liabilities
In FY 2004 the balance sheet of the banking system showed that total assets and liabilities were US $ 165 billion, up 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 of foreign exchange), 22 percent. Liquidity funds (money and quasi-money) accounted for more than 39 percent of total liabilities. The loan to deposit ratio is 100.8% in 2011. In 2014 the ratio of non-performing loans is reported to be around 18%. In 2017, the government is required to pay $ 12.5 billion to domestic banks to pay off debts. A new report shows the assets of Iranian banks rose by 40% in 2014.
By 2014, the total capital of Iranian banks reaches 13.3 quadrillion IRR ($ 480 billion), an increase of 3.8 quadrillion IRR ($ 138 billion) during 2013 (ie a 17% increase over 2013). Deposits in Iranian banks for 2014 reached 5.9 quadrillion IRR ($ 214 billion) and loans paid to the public amounted to 5 quadrillion IRR ($ 183 billion). Deposits showed growth of 34% while loans rose 22% compared to 2013.
(1) Excludes branches of commercial banks abroad. In March 2010, Iran's Saderat Bank, Bank Mellat, Tejarat Bank, and Refah Kargaran Bank were classified as private banks.
Starting September 2014,
Assets: Banks and financial institutions, total claims in the public sector (government and government agencies) amounted to 929 trillion IRR ($ 34.8 billion), and total non-public sector claims amounted to 5412 trillion IRR $ 203 billion). The public sector's claims ratio to claims in the non-public sector was 17.2% in September 2014, 15.6% one year earlier, and 13.4% two years earlier. This trend indicates that the government uses more bank resources than ever before, and that banks are increasingly reliant on government solvency.
Obligations: Non-public sector deposits amounted to 6245 trillion IRR ($ 234 billion) of which 78.4% were time deposits; this figure was 74.5% one year earlier and 73% two years earlier. This trend leads to more time deposits and fewer visions that could result from higher money costs, a downward trend in inflation rate, and stability in the economy. Details of time deposits indicate that 44 percent of short-term and long-term deposits remain long-term. In line with this change, looking at the yield curve over the last 5 years shows that the right side of the curve has moved up significantly and the left side becomes steeper, making long-term deposits more attractive.
Capital ratio
The average capital adequacy ratio of Iranian banks is 4%, whereas according to international financial health indicators, the standard capital adequacy ratio in Basel II and Basel III is above 8% and 12%, respectively. According to the IMF in 2016:
"Where the test identifies deficiencies in capital or risk management practices, [Iranian] banks should be required to present and implement a time-bound plan to remedy this deficiency.Each bank that is not feasible after the process must be resolved >. "
Reserve banking
The Bank's reserve ratio at the Central Bank in 2009 is as follows:
- Current deposit: 20 percent
- Interest-free deposit interest: 10 percent
- Short-term deposits: 17 percent
- One year deposit: 17 percent
- Two and three year deposit: 15 percent
- Four years deposit: 13 percent
- Five-year deposit: 11 percent
- Another deposit: 20 percent
According to Article 14 of the Iranian Monetary and Banking Act, the CBI is authorized to determine the reserve requirement ratio in 10 to 30 percent depending on the composition of the bank's liabilities and areas of activity.
Sectoral allocations from banking facilities
In 2008, Iranian banks extended 70 trillion real ($ 7 billion) to fast-growing economic firms. Under Article 14 of the Bank of Monetary and Banking Laws, the CBI may intervene and oversee monetary and banking affairs through bank restrictions, determine the mechanism for the use of funds and set limits on loans and credits in each sector.
OTC Market
Since 2009, Iran has developed an over-the-counter (OTC) market for bonds and equities called Farabourse . Its shareholders include Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%). In July 2011, Farabourse had a total market capitalization of $ 20 billion and a monthly volume of $ 2 billion.
In 2010, 5.5% of Iran's Telecommunications Company shares Iran offered in Iran's Over-The-Counter (OTC) market, valued at $ 396 million. It is 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. (car parts manufacturing company) became public.
The bond market
Participation paper
An important development for the Iranian capital market is the opening of fixed income markets for the first time in 2009 with the issuance of certificates of time deposits (OTCs traded). The only type of Islamic bond that can be traded in Iran is "Participation Paper". These are usually short-term bonds (1-3 years) and have the same economic characteristics as conventional corporate bonds with fixed interest rates. For participation loans (known as Musharakat (in Persian) or Musharakah (in Arabic)) interest rates charged by the bank depends on project profitability for financing required (as in project financing). In April 2011, the government's plan was to limit the maximum rate by 20%.
The profits and rewards earned for the participation paper are tax-exempt. The Central Bank shall obtain the consent of the Majlis to issue a paper of participation. As of 2012, regulations for fixed income instruments require market makers to always buy back paper from sellers in the secondary market at face value if no other buyers are present. With a paper of participation, at the end of the project, profits must be calculated and then distributed among shareholders. During that time, dividends or interest can be paid.
Approximately nine billion euros of bonds of participation in foreign currency and Iranian rials have been allocated to various projects at the Oil Ministry in 2010. Three billion euros will be allocated to South Pars gas field and the rest will be used for oil field development projects.
- June June's June Mellat offer bid worth 250 million euros overseas is considered the third tranche of offering a total of one billion euros in bonds designed to help finance the development of the 15-18 phase of Iran's Southern Pars natural gas. The bond has a term of three years and an interest rate of eight percent.
- New issues in July 2010 included $ 300 million papers by the City of Tehran and a $ 100 million paper participation by the Ministry of Energy. Most of these participating papers pay 2-3% coupon rates above bank rates.
- Also in July 2010, Iran & amp; Shargh Leasing Co. (the first non-bank entity to register a fixed income product in the OTC market) includes a $ 8 million participation paper.
- In August 2010, Iran sold about $ 500 million of bonds for the first development phase of the gas deposit. A three-year bond, yielding 16 percent.
- In November 2010, Iran will sell $ 2.3 billion of rial bonds to finance the development phase of the two South Pars gas fields. The bonds will be sold through Iranian Saderat Bank, Iranian Bank Melli and Pars Oil and Gas Co. Previously, POGC had sold a $ 1.5 billion paper for the same purpose. This paper pays a coupon of 16% per annum and has a term of 4 years.
- In November 2010, Keshavarzi Bank listed a $ 100 million certificate of one-year-traded deposit (CD) with an annual interest rate of 15%.
- Iran's national budget for 2012-13 has considered the issuance of EUR12.5 billion of bonds to finance domestic oil projects.
For the latest sum and list of issuing agencies, see the CBI annual review here.
Sukuk
Sukuk is an Islamic fixed income instrument, which looks similar to an asset-backed debt instrument. In July 2011 and for the first time since the law was passed 3 years ago, Iranian companies such as Mahan Airlines and Saman Bank have each issued bonds worth $ 30 million and $ 100 million respectively. Iran will also issue sukuk bonds worth $ 15 billion in 2012 to be invested in the domestic oil industry. The trading of Islamic bonds using a greeting format, a deferred sales contract, was annulled by AAOIFI in 2007. But in the Iranian debt market, salam is a common form of sukuk. Mortgage Backed Security (MBS) is allowed in the secondary market of Iran (eg Farabourse). According to AAOIF, the main structure of sukuks is:
- Sukuk Ijara (leasing): "Transfer of ownership for approved consideration"
- Sukuk Musharaka (a joint venture): "A form of partnership between an Islamic bank and its clients in which each party contributes to partnership capital in the same or varying degree to build a new project or share in that already exist, and where each party becomes the owner of the capital permanently or declining and must have a share of the profits "(see" Participation papers "above.)
- Istisna'a Sukuk (manufacturing finance): "Contract of sale of goods determined to be produced or constructed, with the obligation of the producer or builder (contractor) to deliver them to the customer after completion"
- Sukuk Al-Murabaha (cost plus "profit"): "Sale of goods with an approved profit mark on fees" (used as a basis to justify the credit card industry)
List of Iranian banks
In 2010, The Banker enrolled 13 Iranian banks in "the top 1,000 banks in the world". In 2005 the Iranian banking system comprised of central banks, 10 commercial and government-owned commercial banks, and four private commercial banks. In 2004 there were 13,952 branches of commercial banks, 53 of which were overseas branches. Special banks have 2,663 branches. In 2016, banking in Iran employs over 200,000 staff in more than 23,000 branches of banks and national credit institutions.
Commercial government-owned banks
Privately owned government bank
Non-government owned banks
Investment institution
Existence abroad
A number of Iranian banks have established overseas branches, some of which have been subject to consolidation programs. Thus, in recent years, Saderat Bank has acquired Iranian Foreign Investment Bank (from Bank Mellat), and branches of Bank Melli and Industrial and Mining Banks in London to form Saderat International. In addition, London branch Bank Tejarat and Bank Mellat merged to form the Persian Bank. In 2016, Iran's Bank Melli branches in Hamburg and Paris, Sepah Plc Bank in London and Sepah Bank branches in Rome and Frankfurt are also among Iran's state-owned financial institutions licensed to operate in Europe.
Business capital
In recent decades, Iran has shown an increasing interest in various areas of entrepreneurship, in higher educational settings, policy-making and business. Although elementary and secondary school textbooks do not address entrepreneurship, some universities including Teheran University and Sharif University, offer entrepreneurship courses to undergraduate and graduate students.
According to the 2012 Global Entrepreneurship Monitor report, the level of entrepreneurship in Iran among men fluctuates between 14 and 20% while the same rate for women (between ages 18 to 64) fluctuates from 4 to 6% between 2008 and 2012 (& while overall economic participation accounts for only 13% of the overall economy). In 2012, Iran scored 67 out of 177 countries according to the Global Entrepreneurship and Development Index . Some of these activities are under the informal economy.
Iran's fifth economic plan (2010-15) has allocated $ 3 billion to the Early Investment Technology Fund, designed to support new university graduates who want to develop their ideas and implement innovative projects. The Innovation and Prosperity Fund was also established in March 2011 to support the company's knowledge base & foreign direct investment in Iran. Avatech is one of the famous Iranian start-up incubators at Tehran University. Sarava and Griffon Capital is Iran's first venture capital and private capital. In 2014, Private Equity Canton Hermidas and Swicorp are two private foreign equity funds focused on Iran. Foreign companies are beginning to look for ways to start technology companies in Iran or allow their services to be available in the country.
Foreign bank
According to the CBI, five offices of foreign banks (as of May 2012) operate in Tehran and Kish free trade zone.
Article 44 (fifth paragraph) of the Constitution of Iran has previously placed banking activities exclusively in the hands of the government. Along with the Law on Riba-Free Banking Operations, these two measures effectively block the operation of foreign banks from doing business on Iranian mainland. In 2009, the Constitution should be amended to allow foreign banks to operate normally in mainland Iran.
In 2015, there is no limit to the activities of foreign banks in Iran's free economic zone. They may also open branches and representative offices on the mainland or hold a 40% share of independent units.
Overseas branch
The minimum capitalization to set up a foreign bank branch in Iran is 5m euros. A number of branches of foreign banks and representative offices in the country are permitted to carry out administrative and coordination activities but are not permitted to open customer accounts within the territory of Iran, accepting deposits or extending the normative facilities.
To date, foreign banks in Iran have acted as a bridge between foreign companies from the same mother in the host country. Foreign companies learn from Iran's economic and investment opportunities through foreign banks in the country.
In 2010, the Iranian government revoked the percentage limit on shares in Iranian banks that can be owned by individuals or foreign companies. The original law, which applies to Iranians and foreigners, limits the number of shares in a bank that a single company can own up to 10 percent and individuals up to 5 percent. The ownership of Iranian banks is still subject to the limit.
According to the new rules, only the Iranian government has the authority to form a bank together with foreign entities. Foreign entities can now hold more than ten percent of shares in banks along with Iran but their shares can not exceed more than 49 percent. Under the same terms, individuals and foreign bodies with at least 51 percent of Iran's holdings will be considered Iranian companies.
Main Activity
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.
In 2008, Bank Markazi (the central bank) officially inaugurated the opening of the first foreign bank branch in the Iranian capital, Tehran. The Iran-Europe Commercial Bank , registered in Hamburg, Germany, but majority owned by the Iranian Industrial and Mining Bank. The second foreign bank to be established in Iran is the Iran-Venezuela bank. In 2010, similar projects existed with countries such as Russia, Belarus, and Egypt.
In 2009, four US banks, including Citibank and Goldman Sachs signed up to open a branch in Iran. The banks made a formal request to the Central Bank of Iran (CBI) to establish a branch. If Majlis and CBI approve their request, these four banks will establish a temporary branch in Iran's free trade zone. And if they can work in accordance with Iranian banking law (ie free banking usury), they will also be allowed to open branches in Tehran and other cities.
In 2010, the Tehran Times reported [not?] That the banks that requested to work in Iran came from "the states of the Persian Gulf and the Middle East and Asia".
Free trade zone
The minimum capitalization for banks operating in Iran's FTZ is $ 100 million (2016). Foreign banks can operate in Iran's free trade zone area for many years and there are three such banks on Iranian Kish Island in the Persian Gulf (2012). The Iranian Majlis (parliament) has ratified the bill for the formation of domestic-foreign joint banks and insurance companies in the free trade zone.
Sanctions
The United States seeks to isolate Iran from the international financial and commercial system in an effort to promote policy change in Iran over its nuclear program and is recognized as a terror financing.
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 has stopped doing business with Iran because of its economic analysis and corporate risk on the situation in the country. UBS states that it will no longer deal with individuals, companies or state institutions such as the Central Bank of Iran.
Bank Melli, Saderat and Sepah are the three largest banks of Iran. They have been hit with UN and US sanctions over the past two years, over alleged links to Iran's nuclear and missile programs (2008). Malaysia and U.A.E are also working with the United States in imposing international sanctions against Iran.
Insurance industry
Iranian Central Insurance ( Bimeh Markazi Iran ) is responsible for regulating this sector in Iran. Five insurance companies dominate the sector, four of which are active in commercial insurance. The leading player is an Iranian Insurance Company, followed by Asian Insurance Company, Alborz Insurance Company and Insurance Fund Company. Insurance Export and Investment Transactions with foreign trade. Asian insurance companies Dana and Alborz will be listed on the stock exchange in 2009 after reviewing and improving their financial accounts, internal rules and national organizational structures.
In 2006 the market share for private insurance companies reached 54% and 46% for government insurance companies. By the end of 2008, there were 20 insurance companies active in the market, only 4 of them state-owned (with 75% market share). By 2014, twenty-five insurance companies are active in Iran and all, except one, are privately owned. Parsian Insurance became the largest private company listed on the Tehran Stock Exchange in 2010. Parisan is the third largest insurance provider in Iran.
In 2008, the total insurance premium generated in Iran was $ 4.3 billion. It's less than 0.1% of the world's total, while Iran has about 1% of the world's population. The insurance penetration rate is around 1.4%, well below the global average of 7.5%. This backwardness is also seen in product diversity.
About 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). Of the 10 million motorcycles operating on the streets of Iran, only 2 million are insured. Also, 95% of all premiums come from general insurance contracts and only 5% relate to living products (against 58% world average for life insurance in 2011). One of the defining features of the economy is high inflation (and expectation) that is firmly entrenched by the ongoing monetization of fiscal deficits. This results in an environment where no wise person will enter into a long-term savings contract. According to Business Monitor International, unless and until the economic policies in Iran change radically, the reality of the insurance sector will fall far short of its potential.
Blood money was $ 67,500 in 2011, down from $ 90,000 a year earlier.
Since 2012, Iran insured its own oil tanker fleet due to international sanctions.
The payment ratio has shown consistent growth over the years. Last year, the industry's average payment ratio was 86%. Iran has 2 reinsurance. Insurance premiums reach just under 1% of GDP. This is partly due to the low average incomes per head. In 2001/02, third party insurance contributed 46% of the premium, followed by health insurance (13%), fire insurance (about 10%) and life insurance (9.9%).
Insurance Central Iran is currently in the process of applying some deregulation in the industry and migrating from a tariff-based regulatory regime to a prudential one (such as the Solvency regime), which is in line with internationally accepted standards.
The insurance industry's payment ratio reached 63.8% during the fiscal year ending in March 2016. Insurance generated a premium of $ 6.5 billion during the period. Iran Insurance Company, the only state-owned company, contributed 39.47% of the premium. Asuransi Asia and Alborz Insurance rose by a large margin behind IIC, each holding a 10.15% and 7.56% market share.
Third-party automotive obligations accounted for 37.6% of the total premium generated by the insurer during the year ending in March 2016, with insurance selling about 19.18 million automotive policies during the period. Until 2014 the total (non-life) premium market is 1.27% of GDP with only $ 69 per capita spent on insurance.
Starting in 2016, Skuld (shipping) in Norway, Steamship Mutual and Standard Club (shipping), Protection and Indemnity (shipping), French Coface (export guarantees), SACE Italy (export credit agency ), Germany Hermes (export credit agent), OeKB Austria (export credit agency) and Swiss's SERV (export credit agency) return to business in Iran. Many major reinsurance companies are also considering returning to Iran (including Lloyd's, Allianz, Zurich Insurance, Hannover Re and RSA).
See also
- Iranian Central Bank (information on Islamic banking law, payment system, foreign exchange reserves, money supply and monetary policy)
- Iranian Rial - Iranian currency
- Shetab Banking System - electronic banking in Iran
- National Development Fund - Iran's sovereign wealth fund
- Communications in Iran
- Iranian Oil Exchange
- The Iranian economy
- Iran's Economic Reform Plan
- List of major economic laws in Iran
References
External links
- General
- The history of banking in Iran
- List of banks and insurance companies in Iran (with a brief description and contact details per 2011)
- Statistics, balance sheet, analysis & amp; banking laws
- The Islamic Republic of Iran: IMF Staff Report - Statistics on the banking sector and macroeconomic projections by the International Monetary Fund (March 2010)
- Iranian Central Bank - Detailed statistics on Iran's economy and sector, including annual review
- Iranian Trade Promotion Organization - A lot of useful information about trade, FDI, economic reports, customs, laws, statistics, links and opportunities for investors in Iran (Affiliated with Iran's Ministry of Commerce)
- Custom report
- Banking and Financial Markets Guide of Iran, ISBNÃ, 1-4387-2384-9, International Business Publications, USA (2010)
- Economist Intelligence Unit: Financial Services Report - Iran (2010)
- BMI: Iran Commercial Banking Report (56 pages report, 2009)
- BMI: Iran Insurance Report (72 pages report, 2012)
- Videos
- PressTV:
- A close look at Iranian banking: Part I (2010) on YouTube
- A close look at Iranian banking: Part II (2010) on YouTube
- A close look at Iranian banking: Part III (2010) on YouTube
- Iranian Banking System: Part I (2010) on YouTube
- Iranian Banking System: Part II (2010) on YouTube
- Iranian Banking System: Part III (2010) on YouTube
- The Banking System in Iran (2011) on YouTube
- Private insurance companies in Iran (2011) on YouTube
- Reform in the Iranian banking system (2012) on YouTube
Source of the article : Wikipedia
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