The Central Bank has raised the capital requirements for banks in an effort to make the sector more robust and minimize the risk of bank failures.
Central Bank Governor Mohammad-Reza Farzin said May 4 that the capital held by the banks would more than double this year to reach 12 quadrillion rials ($14 billion).
Farzin said no bank would be allowed to continue to operate with capital reserves of less than 200 trillion rials.
He said that tightening capital requirements for banks would enable them to enter the international banking market in the event sanctions are lifted.
“Raising the capital adequacy of the banks is a critical issue for the banking system, and even if all the sanctions are lifted, the banks wouldn’t be able to operate in the international banking system with their current financial statements,” said the Central Bank chief.
Farzin said state-owned banks would increase their capital on hand by collecting their debts from the government. He didn’t say why he thought the government would repay debts that it has refused to pay for many years.
