Iran is set to merge its five military-linked banks with state-run Bank Sepah in a bid to enhance the operational efficiency of the financial sector.
The military-linked banks involved in the merger are Bank Ansar, Bank Qavamin, Bank Hekmat Iranian, Bank Mehr Eqtesad and Kowsar Credit Institute.
The merger is “an important step with a view to maintaining stability and the health of the banking system”, Iran’s central bank was quoted as saying by Bloomberg.
The decision is said to be part of the government’s plan to curb military’s links to businesses.
The latest move comes in the wake of re-imposition of sanctions on Iran by the US.
The sanctions affect finance, shipping, shipbuilding, and energy sectors.
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The sanctions were waived off in 2015 after Iran signed the nuclear pact with the US, UK, France, China, Russia and Germany.
The agreement allowed for the removal of Iran’s economic sanctions on the clause that it limits its nuclear activities.
The reimposition of the US sanction and years of international sanctions has been hitting Iran’s financial system at its core.
According to Bloomberg, the Iranian rial lost around 70% of its value in the unregulated market a year ago.
Some of the nation’s banks are said to be offering interest rates of over 20% to lure clients.