Banks and non-banking credit institutions have been explicitly defined in the new Banking Reform Bill and any institution wanting to enter the financial sector needs to obtain a license directly from the Central Bank of Iran, Deputy Economy Minister Hussein Qazavi said on Sunday.
Discussing the direction of the new legislature, which will replace a former controversial bill sent to the pervious parliament, Qazavi said that lenders' shareholder structure will be subject to strict scrutiny in terms of individual ownership.
"This means that if a shareholder wants to own 10-50% of a bank's shares, regulations have been put in place so they know what conditions must be met in order to be part-owners of an institution," he told Fars News Agency.
Furthermore "penalties have been set for those who provide false information when forming a credit institution. To select CEOs and board members for banks and credit institutions, professional criteria has been defined."
The deputy economy minister for banking, insurance and state-owned companies added that the bill will be ready during his upcoming meetings with the deputy governor of the CBI so that it could be finalized during a meeting between the economy minister and the CBI governor.
The bill also determines the platform for banking activities and services and how branches of foreign banks can be established.
A New Feature
According to the current laws, clients keep their deposits in banks, giving lenders control over how their money could be lent or spent. But according to the new provisions, banks will spend the deposits only with the customer's consent.
On creating and bolstering new institutions within the banking reform bill, the official said: "Plans call for the formation of ranking and rating of the firms. Moreover, the authority and responsibility of the Deposit Guarantee Fund and the Association of Banking and Credit Investment Consultants have been reinforced and Iran Private Banks' Association has been given legal status."
The CBI last year established a 'Deposit Guarantee Fund' to beef up its regulatory oversight of monetary and banking operations.
The deputy economy minister referred to the reform bill sent to the previous parliament. "That plan focused on the allocation of resources and because it had many points in common with the new reform bill, close to 90% of the views of the previous chamber is considered in the amended bill," which makes the early approval of the bill more likely by the new lawmakers.
Among other things, the previous draft bill called for the founding a body at the CBI to supervise the 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.
The government and the CBI then insisted that the provisions would further complicate the already beleaguered banking system.
