Based on a memorandum of understanding signed between Central Bank of Iran and Ministry of Cooperatives, Labor and Social Welfare, 600 credit cooperatives will be authorized to operate in the money market by the regulator.
Deputy Cooperatives Minister Hamid Kalantari said cooperatives will receive the central bank's operational license on condition that their financial services are only offered to the cooperatives' members and not the general public, Banker news website quoted him as saying on Sunday.
"Each credit cooperative should at least have 50 founders, and a minimum of 200 million rials ($7,000) capital to receive a permit," he underlined.
Although all 600 credit cooperatives had been given temporary permits by the regulator, they need to renew their operational license before expiration.
Kalantari said as soon as credit cooperatives complete the documents and agree to adhere to the limits set by the central bank, their operation would be authorized.
"Moreover, the bank and the ministry have approved an executive guideline to accelerate organizing credit cooperatives of various occupational groups across the country," he noted.
Credit cooperatives of occupational groups are established to fulfill credit and financial needs of a certain occupation by collecting small investments from the members and lending it to other members.
"These cooperatives provide money for workers, teachers and staffs of state bodies or private institutions."
Kalantaari said cooperatives are interest-free funds since their main purpose is to provide members with loans at extremely low-interest rates (below 2%) while eliminating unnecessary administrative bureaucracy.
"They intend to help low-income people overcome financial difficulties rather than focusing on maximizing profits."
Since Iran's development plan has emphasized on the expansion of cooperative firms to improve business environment, the central bank has accelerated and eased the accreditation process of such firms.
"As a result, 150 credit cooperatives of occupational groups have acquired permanent operational permits recently," he said.
Credit cooperatives play an important role in financing as they have a 15% share of money market. Over the last couple of years, some of the cooperatives were merged together based on central bank directives, since the regulator believed their operation had distorted the money market, leading to a rise in money supply and inflation.
However, CBI Governor Valiollah Seif said last year (ended March 20, 2015), that he aims to regulate cooperatives.
The central bank has agreed with the establishment of credit and financial institutions in the form of public cooperatives to help boost financial activities of small investors. Kalantari believes the new move would help organize unregulated money market by guiding money supply more efficiently.
Currently, there are over 1,000 credit cooperatives whose members and stakeholders are government employees and workers of manufacturing and service units.
