Having examined several alternatives several times to address the problems surrounding the insolvent Mizan Credit Institution, monetary authorities have finally decided to sell the firm to a consortium of foreign companies operating in the country, according to Hamid Tehranfar, deputy CBI governor for supervision affairs.
“Due attention must be accorded to local regulations based on which foreigners cannot hold more than 40% of the stake in banks and Iranian partners can only have 5-10% of shares, ” he was quoted by ISNA as saying.
Efforts are underway by the regulator to grant permission to the new entity as early as possible in order to resolve the issues surrounding the case.
The official said the final price of the collapsed company will be decided through auditing process. He did not provide details nor name the foreign firms that could be interested in buying Mizan.
Last week, Mohammad Esmailnia, a lawmaker from the city of Kashmar in Khorasan Razavi Province — a region where Mizan was very active – said that monetary authorities have approved the founding of a new bank, to cover all of Mizan’s commitments.
Mizan was founded in 2001 in Mashhad, the capital of Khorasan Razavi Province. It rapidly emerged as a big lender attracting huge deposits, especially from the eastern regions where agriculture, horticulture and dairy farming are major economic activities.
However, failing to get back the huge loans it had splurged on risky ventures on the one hand, and mismanagement on the other, led to its collapse in early 2015.
The former quasi-lender owes 3.3 trillion rials to its customers, according to Tehranfar. It also has huge bad loans as do hundreds of government-owned banks and credit/financial institutions.
Efforts by the CBI to sell the properties of the liquidated firm and repay anxious depositors has also been in vain due also to the lingering stagnation in the real estate market of the country over the past two years.
Major Debts to Be Cleared
If Bank Saderat pitches in to handle the affairs of the collapsed Mizan Institution, 85% of its debts will be cleared by the end of the fiscal Iranian year that ends in March 2016), according to the governor general of North Khorasan Province where the lender was based.
Ali Akbar Parvizi said a total of 2-3 trillion rials ($66.7m- $100m at the official exchange rate) are needed to reimburse the institution’s former depositors, which will be raised by selling Mizan’s assets by Saderat, IRNA reported Sunday.
He said 110,000 of Mizan’s small depositors have so far received their money and said, “The institution’s debts to major customers will be cleared through barter deals.”
The failed institution had created eight months of hassles for the banking and other relevant bodies, Parvizi said and urged the people to first enquire about the credit/financial companies’ trustworthiness and then open accounts with them.
“People should not endanger their assets for a mere 1-2% extra returns on deposits,” he warned.
Mizan Credit Institution, which refused to register with the Central Bank of Iran during 15 years of operation, owes huge amounts to its depositors. Repeated efforts to indemnify the victims of the company have so far proved futile.
