Members of the Majlis Economic Commission continued their review of the much-discussed Banking Reform Bill on Tuesday during which articles related to corporate governance in banks were ratified, said the spokeswoman of the commission.
Speaking to the Islamic Consultative Assembly News Agency, Zahra Saeidi Mobarakeh said as per Article 86 of the bill, all executive organizations, including state-owned and public institutions, and all persons, legal and natural, recognized by the Central Bank of Iran are obliged to give information required for authorization and ranking the banking system’s clients directly to the CBI and/or to banks or companies introduced by CBI.
Back in May 2017, CBI notified Basel III principles on corporate governance to Iranian private banks and credit institutions, as part of the regulator's mandate to incorporate global norms.
Corporate governance principles, a comprehensive set of reform measures, have been developed by the Basel Committee on Banking Supervision under the umbrella of Basel III. The establishment of good and effective corporate governance is one of the major factors contributing to the creation of healthy risk management, oversight and transparency of banking system and paints a clear picture of how the components of an institution must operate to achieve corporate targets.
The Banking Reform Bill is a blueprint expected to replace the current Usury-Free Banking Law. The last amendments to the Usury-Free Banking Law were made in 1983 while the law itself specifies that upgrades are needed every five years.
The bill outlines procedures for banks and non-bank credit institutions to follow for obtaining a CBI license. It explains all banking operations and services, outlines regulations for the establishment of foreign banks and sets limits on their investments.
Other articles put in place a professional set of criteria for appointing new executives and board members, and makes provision for setting up internal risk and auditing committees while detailing lending and capital adequacy rules.
In related news, ICANA reported that lawmakers did not agree with the request for reviewing the reform bill only in the economic commission as per Article 85 of the Constitution.
In an open session held on October 24, the request was rejected by 111 votes to 89. Three lawmakers abstained. The bill will now be debated in the Majlis open session.
However, Mohammad Reza Pour-Ebrahimi, who heads the Economic Commission, believes the bill could be reviewed in the commission more quickly. He said issues related to the banking system are in a disorderly state in terms of economic and social activities.
The Monetary and Banking Committee of Majlis Economic Commission has been reviewing the bill for two years, in consultation with the Supreme Audit Court of Iran and the Majlis Research Center.
Mohammad Mehdi Mofatteh, spokesperson for the Majlis Planning and Budget Commission, said according to Article 85, the Majlis cannot authorize any person or party to set laws, except in emergency cases.
“In light of the sensitivity of the bill, it must be reviewed in the Majlis open session,” Mofatteh stressed.
