Economy, Business And Markets

Bureaux de Change Make Last-Ditch Effort for Survival

Finance Desk
Bureaux de Change Make Last-Ditch Effort for Survival
Bureaux de Change Make Last-Ditch Effort for Survival

Fortunes have turned for bureaux de change operators throughout the country. As the deadline to register with the regulator ended on last Wednesday, it rattled the nerves of bureau owners, compelling them to hold an emergency meeting with regulatory officials to reach a settlement.

Bureaux de change operators held a meeting with Hamid Tehranfar, vice governor of the Central Bank of Iran for supervision affairs, on Friday to seek possible compromises that would make it easier for them to keep their business afloat.

The bureaux operators’ major complaints revolve around the CBI’s new mandate, which asks them to increase their minimum capital requirement. Bureau owners won a similar case last year by convincing the CBI to back down from its decision, which divided exchange companies into two major categories: Type One bureaux which had to increase their capital to 40 billion rials ($120,000 at market exchange rate) up from 10 billion rials required previously and Type Two bureaux which had to augment their capital tenfold from 20 billion rials ($600,000) to a whopping 200 billion rials ($6 milion).

Heavy protests from bureaux operators invoked reaction from First Vice President Es’haq Jahangiri to scuttle the ruling. Bureaus’ bifurcation was ruled out and instead money-changing shops in big cities had to raise their capital base to 40 billion rials and in smaller towns to 20 billion rials.

However, this was not enough incentive to placate money swap companies.  They still complained that all the exchange companies are being tarred with the same brush and that the regulator is exerting undue pressure on them. The ruling lay dormant until the dreaded deadline of Aug. 19 arrived.    

Now that the chips are down, bureaux de change operators are responding with angst: Some hold meetings and lobby for change, while others are dashing to CBI offices to get registered at the 11th hour. As ISNA reported, bureau operators were spotted sending in their credentials to the regulator even on Thursday—one day after the deadline had passed.

 Stubborn Hope    

Bureaux de Change operators’ protests and intense lobbying notwithstanding, there has been no sign of CBI budging under pressure. Tehranfar told the gathering of 139 bureaux operators—some of whom represented their colleagues too—that they should “adapt” their conduct with the CBI’s mandate.

One attendee of the Friday meeting, whose identity was not revealed, told IRNA on Saturday that Tehranfar had promised to work at “making amendments” to the ruling if the companies took certain steps to improve their standing.

Tehranfar has announced that the 40-billion-rial capital requirement would also include immovable property, which is good news for many of these companies whose shops’ value make CBI’s capital requirement pale in comparison.

According to officials, 400 bureaux de exchange have applied to register with CBI to become certified. Currently, there are over 1,400 bureaux in Iran’s foreign exchange market, but only 428 are certified and regulated by the central bank. These shops, which constitute the hub of foreign exchange trading in Iran, are only a segment of uncertified credit and financial institutions that are continuing to imperil the country’s economic stability. Uncertified credit companies had exponential growth during the tenure of former president Mahmoud Ahmadinejad.