Economy, Business And Markets

Insolvent Firm to Reimburse Depositors

Insolvent Firm to Reimburse DepositorsInsolvent Firm to Reimburse Depositors

Vice governor for supervision at the Central Bank of Iran has announced that Mizan Credit Institution’s customers need not worry about their deposits since they will be paid from the institution’s reserve held by the CBI as well as the fund to be raised from the sale of its properties.

Hamid Tehranfar said the firm’s reserve amounts to one trillion rials ($340 million at official exchange rate) which will be transferred into an account supervised by the judicial system to pay back customers’ money, Akhbar Bank news website reported on Wednesday.

The official also pointed to the debt settlement board established in Mashhad, Khorasan Razavi Province, where Mizan’s headquarters is based, noting that the board members were selected by Mizan’s managers. He said the board is in charge of selling the institution’s properties gradually to help reimburse the remaining deposits.

“Although the total value of deposits in Mizan reaches 28 trillion rials ($9.5 billion), it is considered a small institution based on the CBI criteria.”

In early May, Mizan’s board of governors and executives were arrested following a court order. They had failed to reimburse the depositors. Since then, Bank Saderat, the country’s largest privately-owned lender, has taken over the institution.

“The bank will only act as an agent and will not spend any money from its own resources to reimburse Mizan’s depositors,” he said, rejecting the claims made by authorities in Mashhad that Bank Saderat is in charge of repaying all the firm’s debt.

While the banking system is dealing with serious problems, including rising bad loans, government debt to banks and lots of unauthorized credit institutions, Bank Saderat agreed to act for Mizan in legal matters free of charge, Tehranfar noted.

“If the bank refused to do so, the institution’s financial crisis would exacerbate,” he added.

 CBI Sets Deadlines

Earlier this week, Tehranfar said during a televised program that unauthorized institutions will have until the end of this year (March 19, 2016) to either obtain legal permit or go out of business.

He warned that the list of unauthorized institutions will soon be officially published and urged financial enterprises, including auto loan companies and bureaux de exchange, to get their acts together before the year ends.

As the crackdown on unauthorized financial firms gain momentum, CBI officials have announced that five of the credit firms will soon receive legal status, according to the website.

The soon-to-be authorized firms are Arman, Noor, Afzal Toos, Samen and Mehr-e-Eghtesad. The five have succeeded in winning the approval of CBI after meeting the required qualifications, the report said.