Bank Rating System under Review

Financial Tribune – The new rating system for Iranian banks based on which each bank will be ranked is currently under review in the Central Bank of Iran, the director of the Association of Private Banks and Credit Institutions said. "One of the expectations and demands of the association from CBI is that not only a rating system be devised for the banks, but they should also be divided into different categories based on various factors," Kourosh Parvizian also told IBENA.

Last year, CBI's deputy for supervisory affairs, Farshad Heydari, announced that a rating process for Iranian banks will commence in late October and lenders will be classified into four main groups of "no risk", "low-risk", "average risk" and "high risk". He added that "there is no need for the ratings to be publicized".          

Parvizian said it is very important for banks to be divided into categories based on various criteria so people can refer to the banks based on the services they need at the time.

For instance, he pointed to development banks active in industries or agriculture, saying “clients and beneficiaries of development banks can specifically refer to these banks”.

“People must not become confused and refer to any place that has the moniker of a bank to receive banking services,” he added.

Banks must receive their operation licenses based on their rating and that should define their area of expertise, according to the official who emphasized that “not every institution that carries the name of a bank must be able to offer all banking services”.

Parvizian, who is also the chief executive of Parsian Bank, noted that the listing process of companies on the stock market can be replicated in the banking system.

“Banks and institutions can receive a license from CBI for each activity and should they wish to add another activity, they should obtain another license so that for instance, not all banks will be able to engage in foreign exchange activities,” he said.