As the controversial banking reform bill awaits debate in parliament, the chief executive of a major private lender contends that the measure needs to be fully discussed by all stakeholders before being taken up by the Majlis.
“More time is needed to study the bill because banking and monetary regulations are complex issues; the private sector should also review the proposed reforms, which it has not been asked to do yet,” said Kourosh Parvizian, CEO of Parsian Bank in TV debate late Saturday.
Parvizian who represented the Central Bank of Iran in the debate, emphasized that one more year is needed to complement the bill before the Majlis debates it.
The draft version of the banking reform bill was sent to the lawmaking body in mid-April, though it was supposed to be finalized during the previous administration. It is heard that the government wants the bill debated in the incoming parliament in which the majority comprises of pro-government factions. The current parliament, however, seems determined to pass the bill before its tenure ends in late May.
Among other things, the draft bill proposes founding a body at the CBI, mainly to supervise banks’ compliance with Sharia-based regulations. The body would comprise the CBI governor, his deputy for supervisory affairs, five Muslim clerics with expertise in banking and monetary issues and a legal expert.
Simplifying banking services, improving efficiency, adjusting interest rates with real economic conditions and upholding Islamic banking norms are among other measures envisioned in the bill.
Part of the Problem
Pointing to the proposal to establish a new supervisory body in the Central Bank of Iran, Parvizian said “such a body would only complicate matters in the CBI and the banking sector because all laws are passed and reviewed by both the Majlis and the Guardian Council.”
The Guardian Council, made up of six Muslim clerics appointed by the Leader and six lawyers elected by parliament, is charged with ensuring legislation does not contradict religious law or the Islamic Republic Constitution.
The proposal has some positive features according to the senior banker. “Plans related to Qarzol-hasaneh (interest-free) deposits would help improve transparency of such transactions and help attract more interest-free deposits.”
According to the proposed bill, banks will be barred from using Qarzol-hasaneh schemes to lend their own employees because “zero-interest loans must be reserved only for the needy.” Banks are ordered to offer zero-interest loans for justifiable causes like marriage, childbirth, funeral costs, healthcare or bailing out debtors.
“Plans to better control penalties for late (loan) payments are also welcome by banks, though some revisions are needed in terms of auditing.”
Lawmaker Unimpressed
Gholamreza Mesbahi Moghadam, a lawmaker supportive of the bill joined the debate by criticizing the government for not sending the reform bill to the Majlis sooner.
“We still have three weeks to discuss the bill,” he said. “We will be able to review the bill more quickly if parliament allows the economic commission to endorse the bill.”
He noted that representatives from the chamber of commerce, industries and mine would be present in the sessions of the economic commission. “We have also discussed the issue with academia and experts.” The senior cleric said the proposed supervisory body would be necessary for monitoring banking operations. “The fiqh council’s duties would be different from the Majlis and the Guardian Council. Its main task would to supervise the implementation of rules and regulations.”
