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Iran lowers starting capital requirements for offshore banks to $5 mln

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
File photo shows the aerial view of high-rises in the southern Iranian free trade zone of Kish.

The Iranian government has persuaded the country’s central bank to significantly lower the starting capital requirements needed to set up an offshore bank in free trade zones amid efforts to boost foreign investment in those regions.

Government’s top man on free trade zones Saeed Mohammad said on Tuesday that investors and lenders will be able to establish an offshore bank in the Iranian FTZs with a starting capital of $5 million.

The figure is 30 times lower than a previous minimum set in the law governing offshore banks in Iran, said Mohammad.  

He criticized those laws and said they had deterred investment from the FTZs.

“When some people in Iran declared the starting capital at $150 million, it basically meant that setting up offshore banks in the country would be impossible,” Mohmmad was quoted as saying by ILNA news agency.

The change in law comes amid Iran’s efforts to boost investment and manufacturing activity in free trade zones where laws and regulations are less stringent compared to the mainland.

Iran hopes higher trade and manufacturing activity in its FTZs can help the economy recover from the economic impacts of the coronavirus pandemic and the sanctions imposed by the United States.

Mohammad, a former commander of Iran’s elite IRGC military force, said that offshore banks in the Iranian FTZs will be able to process funds belonging to Iranian nationals living abroad.

He added that the government had received numerous requests for setting up offshore banks in recent months, adding that Iran’s central bank will soon issue guidance on how the process can be regulated.  

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