Stricter Regulations on the Exit Ban for Bank Debtors from Iran

On February 10, the Central Bank issued a new directive making it "harder" for bank debtors to leave the country. Contrary to the previous directive, bank debtors are now prohibited from exiting the country for treatment, business matters, or pilgrimage. According to the earlier directive issued in October, individuals with debts exceeding 200 million tomans who lacked "sufficient and valuable collateral" were banned from leaving. However, under the new directive, these debtors could leave the country if they provided "necessary collateral" for purposes such as pilgrimage or "emergency travel for medical treatment and settling debts." The new directive raises the debt threshold for individuals to 300 million tomans for exit bans. Real persons with debts of 300 million tomans and legal entities, such as company managers with debts of 500 million tomans, who lack sufficient collateral will be banned from leaving. Exceptions for these debtors to leave the country for pilgrimage and medical treatment have been removed. Iranian media have previously reported various issues regarding bank debtors, and officials have spoken on this matter multiple times. Valiollah Seif, the Governor of the Central Bank, announced that the volume of bank debts at the end of 2015 was about 90 trillion tomans, but according to a report from July 4 of this year, experts estimate the volume of bank debts to be as high as 125 trillion tomans. Reports indicate that 80% of bank debts belong to 500 debtors. The Research Center of the Parliament described the state of Iran's banking system as "crisis-ridden" and warned of the "risk of bankruptcy" for the country's banks. According to an amendment to the 2016 budget law, late fees for bank debtors with debts under 100 million tomans will be waived if the principal debt is paid. On Tuesday, Mohammad Mahdi Mofatteh, spokesman for the Budget Consolidation Commission, announced that if debtors with debts under 100 million tomans pay the principal, the government will cover the loan interest and waive late fees. In this context, the Minister of Economy stated that 50% of banking resources are locked up, and Valiollah Seif noted that financial constraints have exacerbated the poor state of Iran's banking system. The Research Center of the Parliament described the banking system's condition as "crisis-ridden" and reported that banks are required to provide individuals' information to the tax organization. Questions arise about who will confront bank debtors, with the private sector's debt to Bank Melli Iran reaching 130 trillion tomans. In July 2014, 500 major bank debtors were introduced to the judiciary.