Economy, Business And Markets

Former CBI Chief Denies NDFI Claims

Former CBI Chief Denies NDFI Claims
Former CBI Chief Denies NDFI Claims

Former governor of the Central Bank of Iran Mahmoud Bahmani has rejected recurring claims that the bank had withdrawn money from the National Development Fund of Iran without the fund’s permission.

“It has never been possible for the central bank to lay hands on NDFI deposits high-handedly and without the fund’s permission,” he said in an interview with ISNA on Tuesday.

However, he noted that the issue of investing the money is “something else.”

Defending the CBI’s controversial performance during the presidency of Mahmoud Ahmadinejad (2005-2013), Bahmani said, “Those who claim that unlicensed withdrawals were made from the NDFI simply lack logic and the necessary banking and economic information.”

Bahmani said no money can be withdrawn from the NDFI without prior approval of the owner, i.e. the fund’s board of directors, noting however that it was possible in the past to take out money from the fund with “certain legal permissions.”  It was not clear what he actually meant by the ‘legal permissions’ nor did he explain who has the authority to issue such permits related to taking out huge amounts belonging to the government treasury.


Commenting on the separation of NDFI deposits from the CBI, the former senior banker said he believes it is not the right choice to compartmentalize forex reserves of the country. “It is not appropriate to set up two separate strongboxes and split the foreign exchange reserves when the accounts are transparent and the amount of assets of the fund is clearly known.”

Bahmani was of the opinion that the NDFI account is already separate (from the CBI) and whenever the fund demands its assets the central bank makes it available immediately. He echoed a recent statement made by the head of the Audit Organization, Akbar Soheilipour, who said last week that the “CBI does not keep a tab on the money it holds.” He also said the fund’s board of directors has the authority to oversee all withdrawals from the sovereign fund that was created in 2011 to complement the Oil Stabilization Fund.

NDFI Chairman Seyyed Safdar Hosseini recently complained about CBI’s unapproved access to thefund and charged that the top bank had breached covenants related to the fund and overstepped its authority. The CBI has denied the claims that led to a major controversy among senior monetary officials that was broadly covered by the print media.

Although Hosseini first said he had written a letter to President Hassan Rouhani and requested him to intervene, he was quoted later as rejecting reports attributed to him about CBI wrongdoing in withdrawing money from the fund. New outlets later quoted him as saying that “there was a misunderstanding and his comments had been misinterpreted by the media.”

NDFI is independent of the government budget. Based on the Fifth Five-Year Economic Development Plan (2010–2015), 20% of oil export income is deposited with the fund.