The Central Bank of Iran cannot control the money market because of interference by certain military figures or firms, the parliamentary news agency ICANA reported on Wednesday.
Many unauthorized financial institutions across the country are wholly or partly reliant on military figures, the agency said, citing lawmakers.
“This situation effectively curtails the central bank’s reach in controlling these firms,” the report said.
Unauthorized financial institutions are not new in Iran. The government and the CBI have long been contending with them. But due to interference by various semi-private agencies, including those with military links, the efforts in curbing their activities has been futile.
One of the most sensitive issues the central bank faces when dealing with unauthorized institutions is the vast deposits and resources some of them hold. This makes it hard to for the CBI to simply close down the financial firms or crack down on them decisively, for fear of mass panic or creating a financial turmoil.
Thus, if the government wants to put a stop to illegal financial activities, such firms must be severed from their parent agencies. This would increase transparency bolster the private sector by organizing and stabilizing the money market.
“Many financial institutions are working without a permit and this destabilizes the money market,” said MP Ali-Mohammad Ahmadi. “Moreover, banks and institutions that are authorized to work in the money market are dabbling in speculative activities,” the news agency quoted him as saying.
Another MP, Abdolkarim Rajabi, called on the Tehran Municipality for help, by bringing down the logos of these institutions from city streets and their offices.
“People should not be required to investigate the financial health of these institutions. That is a job for the CBI,” Rajabi said. That is why the bank is the one “responsible for attending the customers of these financial institutions.”
The MPs also called for “gradual” action against illegal firms, by the central bank, in order to avoid shocks and protect tax payers.
Recently CBI officials announced the firing and ban from activity of eight bank CEOs. CBI Governor Valiollah Seif said recently the bank will decide the fate of 14 unauthorized financial institutions by March.
