Financial institution and foreign bank in Free Trade Zone
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Financial institutions in Free Trade Zone

  • According to Article No. 18 of “Management of Free Trade and Industrial Zones” Act and the regulation for implementation of this article:

    • Establishment of bank and financial institution must be in form of “public joint stock company” or “private joint stock company” with registered stock.

    • Establishment of bank and financial institution with domestic or foreign capital has three steps:

      • The organization approval (for definition of the “organization” see Free Trade Zone)
      • The “monetary and financial council” approval.
      • The Central bank approval.
    • Establishment of a branch by a domestic or foreign bank and financial institution has two steps:

      • The organization approval.
      • The Central bank approval.
    • Foreign exchange rates for Iran’s money are determined by “Board of Ministers”.

    • General banking law of Iran will apply to financial activities in the zone. Financial institutions that obtain permission for foreign exchange transactions (i.e. other than Rial) are prohibited to transact using Rial.

    • Establishment of representatives for domestic and foreign banks and financial institutions in the zone needs the approval of organization. This representative cannot take part in any financial transaction.

    • Minimum amount of capital:

      • Banks: 35 billion Rials deposited to Iran central bank.
      • Financial institution: 15 billion Rials deposited to Iran central bank.
      • Branches of foreign banks and foreign financial institutions: 10 billion Rials deposited to Iran central bank.
      • Banks which only involve in foreign exchange transactions (i.e. not transacting with Rial): 10 million dollars deposited to Iran central bank.
      • Financial institutions which only involve in foreign exchange transactions (i.e. not transacting with Rial): 5 million dollars deposited to Iran central bank.
      • Branches of foreign banks and foreign financial institutions which only involve in foreign exchange transactions (i.e. not transacting with Rial): 3 million dollars deposited to Iran central bank.
  • Article No. 27 of “Regulation for implementation of financial activities in free trade zones”: Banks and financial institutions in the zone are prohibited to do:

    • Buying and selling goods for commercial purposes except for implementation of “Non-Gavel Banking Act” and for the purpose of resolving their needs.
    • Transactions on immovable properties more than authorized amount (Iran Central Bank will declare the authorized amount) except for banks and institutions which their purpose is to transact on immovable properties.
    • Buying shares of companies, partnering with companies via providing capital, and buying securities on their own account more than authorized amount (Iran Central Bank will declare the authorized amount).
    • Providing facilities and loans for CEO and members of directing board and for companies in which these persons are beneficiary, more than authorized amount (Iran Central Bank will declare the authorized amount).
    • Providing facilities and loans for CEO and members of directing board of organization and for directing board and auditors of central bank except with permission of central bank.
  • Article No 29 of “Regulation for implementation of financial activities in free trade zones”: Banks and financial institution in free trade zone must provide necessary information for Iran Central Bank including:

    • Implementation of central bank’s monetary and financial policies.
    • Legal deposits.
    • List of their accounts and financial statements.
    • Balance sheet and profit and loss account.
  • Professional competence of Members of board of directors, CEO, and directors of branches of banks and financial institutions must be approved by central bank.

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