Several unauthorized financial institutions have been taken to court for “defying the Central Bank of Iran”, Ali Tayebnia, minister of economic affairs and finance revealed on Monday.
Without identifying the institutions, Tayebnia told reporters that the CBI’s policy is to organize uncertified financial firms but “unfortunately these firms sprang up in the past without seeking any authorization from the regulator or even other supervising bodies”, Banker website reported.
“The good news is that other state bodies and the judiciary system in particular have pledged to help us regulate these firms, some of which have been taken to court for disregarding our mandate”, Teyebnai said.
He added that sooner or later, the uncertified firms will have to acquiesce to the CBI’s regulatory demands. “They will either comply with our conditions or else they will be dismantled”, he threatened.
High Risks
Tayebnia urged people to stay away from uncertified institutions and not to trust them, saying that higher deposit rates at these firms come at great risks.
He recalled the bankruptcy of some of the uncertified institutions in the past and said such incidents had in fact jeopardized other people’s money.
“It is only natural that when an uncertified institution fails, the CBI feels no obligation to bail them out which means heavy losses of people’s resources. That is why I ask people to invest their money only in banks and institutions which are supervised by the CBI”, said Tayebnia adding that the deposit rate ceiling set by authorities are now well above the inflation rate, which secures positive real-interest rates. “So people can benefit from these rates by investing in commercial banks which is risk-free and their money is also kept safe.”
Parliamentary Action
Meanwhile, Mohammad Reza Bahonar, parliament deputy speaker, said the house has demanded that CBI tighten up its supervision over uncertified financial firms.
“The parliament has asked the central bank to set the record straight on illegal financial institutions within a certain timeframe”, Bahonar said.
Since dealing with uncertified firms falls within the purview of the executive branch, the parliament cannot intervene directly.
Some provisions have recently been made at the Center for Fighting Economic Corruption to effectively address the issue.
The lawmaker said if dissolved, unauthorized firms should specify who would manage their affairs so the people’s money is protected.
There are over 7,000 financial and credit institutions and funds operating in Iran, six of which have significant annual turnover (up to 20 percent).
The CBI has repeatedly threatened to dissolve the unauthorized institutions, but the firms have so far defied the regulator’s warnings.
Naming Names
To provide people with the latest information on uncertified financial institutions, the CBI releases news on its website and communicate with the news media, according to the deputy governor for supervision in the central bank.
Hamid Tehranfar revealed in a televised program on Sunday that Mehr Eqtesad Bank and Arman Credit Institution have gone through legal process to receive the CBI’s operation permit.
Mehr Eqtesad was formerly known as Mehr Financial and Credit Institution. Arman has kept its name even after it was merged with Fereshtegan Credit Institution.
Among the largest are Samen Alhojaj and Mizan institutions which do not have any licenses, Tehranfar said.
Samen Alhojaj, which started operation in 2007, is directed by Abolfazl Mirali. The private institution has 450 branches across the country. It’s website does not provide any information on the company’s stakeholders.
