EghtesadOnline: Close to two years after the Joint Comprehensive Plan of Action was signed, the Iranian banking system has regained the lost ground and established 808 correspondent banking relations with 286 foreign banks.
That is while more than a decade ago and before the unilateral sanctions hit the country's financial system, Iran was interacting with 633 banks, which declined to 119 five years ago, IRNA reported.
JCPOA is the formal name of Iran's nuclear accord with world powers implemented on Jan. 16, 2016.
The declining trajectory continued sharply even as the Iranian negotiating team was hard at work and at its worst, only 30 banks throughout the world worked with the country three years ago, entailing massive costs for undertaking financial transactions, Financial Tribune reported.
The nuclear deal had an immediate impact whereby the number of foreign banks working with their Iranian counterparts increased to 103 in the first three months following its implementation.
The deal lifted sanctions imposed against the Central Bank of Iran, Tejarat Bank, Bank Refah Kargaran, Export Development Bank of Iran, Bank Sepah, Post Bank, Bank of Industry and Mine, the Hamburg-based Iranian-European Bank (Europaisch-Iranische Handelsbank AG), Cooperatives Development Bank, Bank Sina, Bank Mellat, Bank Melli Iran and Bank Saderat.
It removed restrictions on transactions between Iranian and foreign natural and legal persons.
According to statistics shared with IRNA by the central bank, from Jan. 2016 until Dec. 31, 404 letters of credit were opened, 3,421 negotiable instruments were issued and 132,999 payment orders were registered by Iranian banks.
This is while lenders were unable to engage in any of these activities under the sanctions, meaning that businesses had to move the bulk of their foreign exchange transactions to bureaux de changes that were not only unsafe, but also increased the cost of transactions significantly.
Nevertheless, major international banks have kept their distance from working with Iran for fear of endangering their US operations and becoming subject to penalties devised by the US Treasury Department.
This is problematic for Iran and its repercussions are not hidden to Iranian officials. CBI Governor Valiollah Seif has conceded that the banking system is facing many hurdles, but says the monetary regulator is working on them.
Mohammad Reza Hosseinzadeh, who helms Bank Melli Iran, the nation's biggest bank, said, "We are still far away from pre-sanctions conditions", but noted that the current situation is a far cry from when it was under the heavy pressure of sanctions.
"It will take some time until the international banking system begins to trust Iranian banks again," he added, referring to the fact that Iranian lenders are still lagging in terms of adhering to international regulations on anti-money laundering and combating financing of terrorism than their international counterparts as they were isolated for years.