Economy, Business And Markets

New Hope for Mizan Employees

New Hope for Mizan Employees New Hope for Mizan Employees

The Central Bank of Iran has reportedly greenlighted a move by private banks to hire the former employees of the defunct Mizan Financial Institution.

Akhbar Bank website quoted a government official at Khorasan Razavi Province—where Mizan institution was based—as saying that CBI had tentatively agreed to private lenders hiring former Mizan’s employees who lost their jobs when the uncertified credit company was shut down in May by CBI. The official, Ali Rasoulian, was accompanied by Mashhad’s prosecutor general.  

All board members of Mizan institution were detained by the police in Mashhad, Khorasan Razavi, after they missed a court deadline to settle their debt with depositors.

In the aftermath of the event, CBI gradually moderated its stance on uncertified credit companies, with vice governor of the bank announcing this month that CBI is not after “dismantling” the unauthorized institutions and rather seeks to incentivize them to become regulated.    

During a televised interview, Rasoulian said the proposal had been made to CBI by provincial authorities to solicit private banks to help redress the woes of Mizan institution.

“Since the law bans lenders to expand their branches, the CBI agreed to allow banks that hire Mizan’s former employees to increase their branches accordingly,” said Rasoulian.

He added that Mizan depositors with less than 30 million rials are being reimbursed now.  The number of these small-scale depositors is approximately 400,000.

Rasoulian, however, refused to set any date for the full reimbursement of Mizan depositors, saying that the authorities are doing what they can to address the issue.

 Parliamentary Reaction

Meanwhile, deputy chairman of Parliament’s Economic Commission stressed the need for paying off depositors of unauthorized institutions before any crackdown is enforced.

Rouhollah Beigi, told parliament’s website ICANA that settling accounts with customers should precede any heavy-handed action so as to prevent sit-ins and demonstrations by depositors in front of these companies.

“Incentivizing uncertified institutions that have not committed violations in the past is necessary for the economic stability of the country,” Beigi said, welcoming the softer approach adopted toward unauthorized financial and credit institutions.

The lawmaker said any interbank relations with unlicensed credit institutions should be treated as an offense and asked CBI to act against illegal institutions without favoritism.

“CBI’s firmness in confronting illegal institutions should be in a way that no other company would dare operate without a license,” he said.

 The growth of unlicensed credit and financial institutions picked up steam during the two-term presidency of Mahmoud Ahmadinejad and has become a major headache for President Hassan Rouhani’s administration.