The Central Bank of Iran has repeatedly cautioned commercial banks against doing business with illegal financial institutions, but it seems the warning has largely fell on deaf ears.
Akhbar Bank news website disclosed on Wednesday that business interest has made some public-sector banks and the much-despised illegal institutions continue financial cooperation.
“A big public-sector bank is providing a certain illegal financial firm with POS services,” the report said, without identifying either the bank or the institution. It added that POS devices belonging to the commercial bank are being publicly used by the uncertified institution.
The CBI multiple directives have banned all commercial banks from offering services – including POS services and ATM services – to illegal institutions or opening accounts for them.
Akhbar Bank quoted one of the employees of the big commercial bank as confirming that their POS devices are being used by the unauthorized institution “without any problem.”
The only information the report revealed about the institution was that it has over 500 branches across the country.
It is estimated there are over 7,000 financial and credit institutions and funds operating in Iran, six of which have significant annual turnover.
Judiciary Crackdown
In his most recent press conference, judiciary spokesman, Gholamhossein Mohseni Ejei said 500 “illegal” credit institutions are operating without any permit from the CBI. He said both the CBI and the Headquarters to Fight Economic Corruption have joined forces to tackle the issue.
The other urgent issue on agenda at the headquarters is non-performing loans, Ejei added. “To address this issue, a working group comprised of representatives from the three branches is seeing into the affairs of these bad institutions case by case,” he said, adding that the more urgent cases are being tackled first.
Ejei confirmed the closing of Mizan Credit Institution, a court case that reached a crescendo when its board members were detained on May 17. The defunct institution was to be overtaken by Bank Saderat.
Uncertified financial institutions mushroomed during the presidency of Mahmoud Ahmadinejad. They have been thumbing their nose at the regulations of the CBI, attracting large number of unsuspecting customers by offering unusually high deposit rates.
In a recent opinion piece in Jomhourie-Eslami newspaper, the columnist Morteza Najafi Ghodsi censured these institutions for exploiting the religious sentiments of people by adopting holy names for their companies when they are in fact “wallowing in corruption.”
Another controversial point is the airtime given by state TV to the firms to run commercials and promote their businesses.
