[citation needed] The Karafarin Bank was initially established as the Karafarinan Credit Institute.

[citation needed] With an initial capital of 30 Billion Rials, the Credit Institute received its operating permit from the Central Bank of Iran on December 1, 1999.

About 85% of the capital was contributed by the founding shareholders and the balance was offered to the general public, which was taken up within days.

[citation needed] The Institution was incorporated on December 9, 1999 (equivalent to 18/9/1378 in Iranian calendar) under registration number 157915.

New articles of association was adopted; the paid-up capital was increased in two stages to 200 Billion Rials (just over $25 million); and, shares of those shareholders who did not take advantage of their primitive rights (with respect to the seasoned equity offering) were sold to new shareholders.