Lawmakers have called on the government to plan for a final and permanent solution to the seemingly unending problems emanating from and related to the unauthorized financial and lending institutions.
The large and growing footprint of illicit credit institutions has rather made it difficult to determine their exact numbers spread across the country. However, Hamid Tehranfar, deputy governor of the Central Bank of Iran puts the number at or around 7,000 excluding interest-free funds and microcredit cooperatives, Eghtesad News website reported.
Over the past two decades, the growth and expansion of these institutions has often led to economic and even social problems, destabilizing the country’s money market. Despite concerted efforts by the CBI in the past few years to organize such companies and institutions, their threat still looms large.
Some of them have invested heavily in construction projects to be able to pay the high deposit returns. However, venturing into business activities without calculating possible risks has, at times, led to trouble that eventually hurts depositors.
Ebrahim Nekou, a member of the Majlis Economic Commission says “Even during an economic boom, the government has to monitor the activities of all financial and credit institutions and warn them against the consequences of risky practices. When trouble erupts, depositors usually look to the government and expect it intervene and investigate.
He criticized the government’s nonchalant attitude in dealing with the quasi-lenders and said “When a lender is in trouble, the government must immediately step in and find a reasonable solution to the problem.”
Nekou however, admitted that it would be difficult for the government to organize or bail out all troubled unauthorized firms and called on authorities “to set up a special working group to monitor and organize them.”
In the absence of effective measures, he said, the bad situation would only become worse.
Rouholah Beigi, another member of powerful parliamentary commission regretted that “Around 20% of the country’s total liquidity which is estimated at 8.72 quadrillion rials ($289billion) is held by unauthorized financial and credit institutions. “These institutions should not be confronted, they need to be managed and organized.”
He criticized the central bank’s heavy-handed approach towards unauthorized lenders saying “in light of the large numbers, a suitable strategy is to organize them.”
The lawmaker blamed the rise of unauthorized lenders on the failure of commercial banks to deliver quality services to depositors. “The large amount of bank’s debts to the central bank estimated at one quadrillion rials ($33billion) demands that the regulator opt for a gradual but constructive interaction with lenders to safeguard depositors.”
