Full Text of Bylaw on Monetary and Banking Operations in Free Trade-Industrial Zones of IRI
Abrare Eqtesadi; Economic (Morning Daily)
May 29, 2000, No. 568, Page: 7
The Bylaw on Monetary and Banking Operations in Free Trade-Industrial Zones of the Islamic Republic of Iran was decreed by the First Vice President Dr. Hassan Habibi. According to the Bylaw, buying and selling of all currencies in exchange of Rial or other currencies and all currency transactions and transfers in the Zones, by natural and legal persons, are permissible.
Based on the same Bylaw, the minimum amounts of capital of the banking units in a Zone are as follows: a. Banks: minimum of 35,000,000,000.00 (thirty five billion) Rials, b. Institutes: A minimum of 15,000,000,000.00 (fifteen billion) Rials, c. Branches of foreign banks or institutes: A minimum of 10,000,000,000.00 (ten billion) Rials.p>Chapter 1
Article 1: In these regulations, the following terms are used in lieu of the corresponding phrases:
Act: The Act on Administration of the Free Trade - Industrial Zones of the Islamic Republic of Iran and its due amendments;
Conditions For Establishing
Banks & Institutes
Article 2: Establishment of banks and institutes and engagement in banking operations and using the names ô Bank ô or ô Institute ô in a Zone shall be permissible solely through compliance with the provisions of the Act and these Administrative Regulations and the relevant Instruction Guidelines.
Note: The banking units which receive the license for offshore banking operations are required to use the term ô Offshore ô along with their names.Article 3: Banks and institutes with either Iranian or foreign capital or with Iranian or foreign partnership being registered in a Zone and whose main office being located in the same Zone shall be regarded as the registered Iranian banks or institutes in the Zone.
Article 4: Establishment of banks and institutes and setting up of branches of banks and institutes, either Iranian or foreign, in the Zones shall be subject to the recommendation of the Authority and issuance of the due license by the Central Bank.
Note 1: The Monetary and Credit Council thereto shall after being recommended by the Authority, confirm statutes of banks and institutes and any other amendments.Article 5: Registration of banks or institutes or branches of foreign banks in a Zone shall be contingent upon issuance of the license subject of the Article 4 of these Administrative Regulations. The registry authority in a Zone is obliged to demand the said license prior to registering the banks and institutes.
Note: Establishment of representation offices of the Iranian or foreign banks and institutes shall be subject to confirmation of the Authority as well as the registry authority in the Zone.
Such offices are not authorized to perform any banking transactions and operations.
Article 6: The Branches of banks which are established prior to the adoption of these Administrative Regulations, in a Zone, shall not require to obtain new licenses; however, the operations of the aforementioned branches shall be in accordance with the provisions of these Administrative Regulations and the relevant Instruction Guidelines.
Article 7: The minimum amounts of capital of the banking units in a Zone are as follows:
a. Banks: minimum of 35,000,000,000.00 (thirty five billion) Rials, one hundred percent of which shall be deposited in cash with the Central Bank
Note 1: Issuance of the establishment license for the banking units with foreign capital subject of the above paragraphs a, b and c shall be subject to submission of the foreign currency sale declaration to one of the established banking units in the Zones, equivalent to the capital belonging to foreign nationals.Article 8: The banks and institutes being operational in a Zone are entitled to establish their branches (in the Zones) subject to securing the agreement of the Authority and confirmation of the Central Bank.
Exchange System of the Free Zones
Article 9: Buying and selling of all currencies in exchange of Rial or other currencies and all currency transactions and transfers in the Zones, by natural and legal persons, are permissible.
Article 10: Transfer of all currencies from outside the country to the Zones and vise-versa, by natural and legal persons, is permissible.
Note: Transfer of currencies from other parts of the country to the Zones and vise - versa, by natural and legal persons, shall be subject to the foreign currency rules and regulations of the country.Article 11: The exchange rates for foreign currencies and their exchange rates vis--vis Rial shall be determined on the basis of their supply and demand in the free market.
Conditions for Operations
Article 12: Banks and institutes and branches thereto shall be entitled to commence their operations after securing the due establishment license subject of the Article 4 of these Administrative Regulations, being registered by the Zone Registry authority, complying with the provisions of these Administrative Regulations and submission of the documents specified hereunder:
a) All the banking units in the Zones shall be subject to the provisions of these Administrative Regulations and the relevant Instruction Guidelines.Article 14: The monetary and credit regulations adopted by the Central Bank for the established banking units in the Zones shall be devised in line with the objective of encouraging and facilitating investments in the Zones as well as preserving the international competitive status of the same.
Article 15: The offshore banking units shall not be entitled to perform banking operations in the Iranian Rial.
Article 16: The banking units are required to secure the due license from the Central bank for their foreign currency transactions. The said units may include the request for the license concerning the foreign exchange operations in their application for establishment.
Article 17: The banking units having the required license for exchange operations are entitled to provide the following services, on the basis of the type of the license which they secure, and in compliance with the provisions of these Administrative Regulations as well as the latter's Instruction Guidelines:
Article 18: The commission for the banking operations, the rate of interest for the granted and received credit facilities as well as the rate of interest for the various kinds of deposits in the international banking operations shall be determined by the conditions in the free market.a) Granting various kinds of credit facilities;
Article 19: The banking units, excluding the offshore banking units, shall be entitled to secure their required financial resources in Rial in accordance with the provisions of the non-usury Banking Operations Law as well as the other laws and regulations in force through the following means:
Article 20: The banking units, excluding the offshore banking units, shall be entitled to grant credit facilities in Rial, within the framework of the Interest-Free Banking Operations Law.a) Admission of interest-free current and saving deposits;Note: The credit institutes shall not be entitled to receive interest-free current deposits in Rial from their clients.
Article 21: The banking units, excluding the offshore banking units in the Zones, shall be entitled to undertake the other permissible banking operations in Rial, in accordance with the provisions of their own statutes.
Article 22: The banks and institutes in the Zones shall not be entitled to increase their capital through the re-assessment of their assets.
Article 23: The banks and institutes and branches of foreign banks and institutes in the Zones shall constantly be required to consign, as legal deposit, to the Central Bank a fraction of the deposits consigned to them in the amount and the kinds of currencies determined by the latter. The amount and kinds of currencies concerning the legal deposits may differ on the basis of the kinds of deposits and the scope of the banks' and institutes' operations.
Note: The Central Bank shall pay an appropriate rate of interest in foreign currencies, at its own discretion, to the received legal deposits in the foreign currencies.Article 24: The Banks and institutes and the branches of foreign banks and institutes in the Zones shall be required to preserve a fraction of their annual net profits as legal reserve. The ratio of the said reserve shall be at least 15 (fifteen) percent of the net profits. Preservation of the aforementioned reserve shall be optional after its accumulated sum has increased to as much as the amount of the capital.
Article 25: Foreign currency assets and liabilities of the banking units based in the Zones are to be converted, on the basis of the free market rates, at the termination of each financial term.
Article 26: The Zone û based banking units are not entitled to accept their own shares as sureties for their granted facilities.
Article 27: The banks and institutes based in the Zones are not entitled to perform the operations as follows:
a) Buying and selling goods in their own accounts and with the purpose of trading, unless such operations are performed in line with the implementation of the Non-usury Banking Operations Law or to meet their own internal needs;
Article 28: Should the capital of the established banks and institutes in the Zones decline, due to any damage or loss, from the minimum amount provided in the Article 8 of these Administrative Regulations; action should be taken by the former to replenish the capital to the aforesaid amount in a period not exceeding six months.
Regulations on Supervision Over
Article 29: All banks and institutes and branches of foreign banks and institutes based in the Zones shall operate under the supervision of the Central Bank and while providing the latter with its required information, they shall comply with the rules and regulations as follows:
a) Compliance with the monetary and credit policies adopted by the Central Bank;Article 30: Should continuation of the banking units' operations in a Zone involve, by the discretion of the Central Bank, any risks, the latter shall be entitled to assign a comptroller to the concerned banking units.
Article 31: Members of the Board of Directors, Managing Directors, First Deputy Managing Directors and members of the Executive Boards of banks and institutes as well as directors of branches of the Iranian and foreign banks and institutes in the Zones should be accredited for their professional competence by the Central Bank.
Article 32: The banking units in a Zone shall be held responsible for the losses caused by their operations for customers and are obliged to indemnify the latter for such losses.
The Managing Director and members of the Board of Directors of each bank or institute in a Zone shall also be held responsible towards the shareholders and customers for the losses caused by any of them because of violating these regulations or provisions of their statutes.
Article 33: In order to facilitate interchange of checks and bank shares a Clearing House shall be set up by the banking units in a Zone with the sponsorship of the Central Bank.
The operational expenses of the said Clearing House shall be borne by the aforementioned banking units.
Article 34: The manner in which securities, documents and books should be preserved, the arrangement for the settlement of disputes, dissolution and bankruptcy of banking units (in a Zone) and other issues which have not been provided by these Regulations shall be dealt with in accordance with the provisions of the Monetary and Banking Law, ratified in 1973.
The Instruction Guidelines concerning implementation of these Regulations shall be adopted by the Central Bank.