Head of the Tehran Chamber of Chamber of Commerce, Industries, Mines and Agriculture said the banking bill now being debated in the Majlis is a matter of concern for private companies.
Mosoud Khansari conveyed the list of concerns voiced by the already struggling private sector in a letter to Majlis Speaker to Mohammad-Baqer Qalibaf. He complained that the lawmakers have been indifferent toward private sector proposals for amending key provisions of the controversial bill.
“This bill has raised concerns business owners. It (the bill if it becomes law) will deprive the country of the capacity to stabilize the macro economy, tame inflation and promote healthy banking,” the rare letter said in part, ISNA reported.
Backed by parliament, the bill “Comprehensive Islamic Republic Banking Bill” seeks to incorporate four key banking rules, namely the Monetary and Banking Act, Law for Usury Free Banking, Management of Banking Affairs Act and the Law for Establishing Nongovernment Banks.
The proposal came to the chamber last week despite appeals by academia, economists and monetary experts to wait and first let the central bank-initiated bill be discussed by the MPs.
The latter argue that the legislature did not care to solicit the government’s opinion in drafting the key legislation.
Khansari’s letter took stock of major flaws with the bill, already made by respected monetary and banking experts. He asked the speaker to “to make his best efforts to tap the historic opportunity to redraft the bill to help revive economic stability”.
The senior private sector official noted that the new legislation will create bigger problems and challenges for economic and monetary stability.
“It will lead the credit system in the country in a way that it be used to serve the short-term political goals and meet the government’s funding needs,” Khansari warned.
Bankers’ Apprehensions
In early August, a group of banking and monetary experts, namely former governors of the Central Bank of Iran, shared the same concerns with lawmakers and called for postponing the particular legislative process.
The senior bankers along with economic and monetary experts said the bill should be separated into at least three independent bills drafted by the CBI.
The controversial bill lacks effective proposals for dealing with usury-free banking and has vaguely addressed this key issue – one major flaw with the current banking law, they noted.
The new legislation, they say, instead focuses on changing the structure of the CBI and rewrite monetary policies, which is “not only not enough to address the banking ills but would lead to new management challenges”.
In addition, the bill does nothing to loosen the government’s ironclad grip on the central bank and consolidates it further, potentially fueling runaway inflation resulting in more borrowing by the government from the CBI to plug its deep deficit holes.
The bill, its opponents insist, gives unlimited power and authority to the consultative Fiqh Council, allowing it the last word on almost all key banking and monetary policies.
As per some provisions of the bill approved by MPs last week, the general assembly, supreme board, the board of directors, board of supervisors and the Fiqh Council woule be the five pillars of the central bank, the parliamentary news website, ICANA reported.
Members of the supreme board would include: the CBI chief who will function as president of the board, the economy minister, head of the Planning and Budget Organization, two economists specializing in monetary and currency policies and two banking specialists.
The supreme board will meet twice a month and its decisions must be approved by at least four of the five members. The top body is tasked with making critical banking and monetary decisions, such as setting monetary, banking and credit policies, determining banking fees and interest rates, approve bylaws and regulations, issue permits for credit institutions and annul those that exist, among other things.
