Uncertified financial institutions have come under unprecedented fire from the Central Bank of Iran and other government officials in recent months. The arrest of board of directors of Mizan Financial Institution last week put these illegal bodies in the national spotlight once again. Valiollah Seif, governor of the central bank and Ali Tayebnia, minister of economy, have said these institutions should either come under the supervision of the CBI or face shutdown.
During a televised debate on Tuesday night, Mahmoud Ahmadi, secretary general of the CBI and Mohammad Hossein Hosseinzadeh, a member of the economic committee of the parliament, exposed some new aspects of illegal financial firms, IRNA reported Wednesday.
Ahmadi criticized the airing of some of these firms’ commercials by the IRIB – state-owned TV – to promote their services, especially on religious holidays. “The commercials give these firms a veneer of legitimacy and people will be bamboozled into trusting them.”
“By opening accounts in illegal institutions, people put their money in jeopardy and this is a very risky act “, Ahmadi warned.
About six uncertified institutions are holding up to 20 percent of the people’s savings. These firms have mushroomed across the country by offering higher deposit rates than banks.
Tighter Supervision
Ahmadi said by utilizing advanced integrated systems, the CBI now has a more intensive supervision over banks and financial institutions.
“We have told commercial banks to cut off ties with illegal institutions”, he added, regretting that some “influential figures” throw their support behind these unauthorized institutions. He said “unauthorized institutions have grown so much that cracking down on them prompts some officials to rise in their defense. Nevertheless, effective crackdown is possible with support from the judiciary and the police.”
Hosseinzadeh said the illegal institutions have flourished because commercial banks and certified credit intuitions have continued to cooperate with them over years. “A handful of illegal firms have obtained enough leverage to influence economic policies of the country,” he complained.
“The interesting point is that the money belonging to these institutions is circulating through legal banks and institutions”, he added.
Morteza Bakhtiari, deputy attorney general, who was speaking on the phone during the program, said the law clearly states that the central bank is the only body in charge of monetary policies.
Over two million people have money in illegal institutions. Bakhtiari said that unless the CBI files lawsuits against these institutions, the judiciary is unable to act against them.
There are over 7,000 financial and credit institutions and funds operating in Iran, six of which have significant annual turnover.
