CBI Sets Rules for Forex Operations of Non-banking Credit Institutes
Nourlaw.com-Tehran- 18 January 2017- The Central Bank of the Islamic Republic of Iran (CBI) in its resolution No.95/344396 dated 29/10/1395 has set out rules for non-banking credit institutes to perform foreign exchange operations.
According to Article 4 of the resolution, the credit institutes are allowed to render forex services in three stages. Some of the services are: purchase, sale and transfer of forex; Opening saving accounts; issuance of documentary credit and bills of exchange for export and import; granting a substantial list of all types of guarantees; Investment in all types of negotiable papers; representing foreign credit institutes; concluding finance and refinance contracts; taking part in inter-bank forex markets; issue of negotiable instruments such as Participation Papers and Sukuk bonds.
Participation Paper is a tradable Islamic bond in Iran and according to Financial Times Lexicon, Sukuk bonds are structured in such a way as to generate returns to investors without infringing Islamic law (that prohibits riba or interest). Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity.