Arguably, the rules of international banks and their relationship with Iran will make the country high in system of banking. The decision of Iran, taking part in banking system will play a prominent role in eradicating its present shortcomings.
Iran's bank has come up with a policy, which will be allowing international banks to have branches in Islamic republic as well as purchase stakes in banks of Iran. According to news published in 7Days, this move by Central Bank of Iran is bound to have a positive effect throughout the Gulf region, as Iran will be viewed as a fertile territory by them where the can expand and the promote Shariah-compliant financial instruments, which is incidentally the biggest segment for growth in finance world.
The move follows a constant pressure from US on the banks of Europe to minimize the business with Iran in order to measure the pressure on Tehran to finish up its challenge over locking, the delicate nuclear work. Keeping this aside, international banks' involvement in Iran will not only ease in technology transformation but also in experience and exchange of information in a longer run.
Experts believe that the participation of international banks in Iran will increase the overall action in the bank of Iran. In addition, it will also create an atmosphere of competition and then, this sort of competition will gradually have an effect in dip in rates of interests and increase in loans.
According to a research analyst at RNCOS, "Banks of UAE are already well placed organizationally as well as geographically and therefore can benefit from the directive if it comes to fruition. Currently, the opening of overseas banks is allowed in free trade-zones such as southern island of Kish. However, it is yet to be seen if the decision of Central Bank can herald a shake up of the banking scene in Iran. Banking is entirely a domestic industry in Iran at present".
The analyst further said, "This is a welcome step by Iranian government as it establishes a connection between the country and international monetary-network. Furthermore, any measure facilitating the participation of Iran in global banking will benefit the country's economy."
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