The governor of the Central Bank of Iran announced that the Usury-Free Banking and the Central Bank Reform Bills will be sent to parliament by late August.
“Two new bills under the moniker of Central Bank Reform bill and the Usury-Free Banking bill –aka the Banking Reform Bill – are now being finalized and will be sent to Majlis if approved by the government”, said Valiollah Seif, ICANA reported.
The CBI Law – first approved in 1972 – was crafted to upgrade and modernize banking regulations which eventually led to the drafting of the CBI Reform Bill. Improving the independence of the CBI, enhancing monetary policy-making and the CBI’s supervision over the money market are among its key goals.
In related news, the architect of the banking reform plan said the CBI Reform Bill would soon be presented to the government.
“In 2011, the CBI and the Ministry of Economy were reviewing two bills called the CBI Reform Bill and the Banking Reform Bill to overhaul the banking system, but were not pursued,” said Hussein Eyvazloo.
“President Rouhani’s government revitalized the two bills and meetings are held regularly at the Economy Ministry to discuss it.”
In late June the head of Monetary and Banking Research Institute, Ali Divandari, said a revised version of the Banking Reform Bill would be sent to parliament by the central bank. Added attention has been given to the promotion of Islamic finance in the new version.
“In this bill prominence has been given to the expectations of the public and the banking industry from usury-free banking.”
The last reforms to the Usury-Free Banking Law were made in 1983. The law says clearly that reviews are needed every five years. But despite that, the law has not undergone any major modification in the last three decades.
The Banking Reform Bill defines the duties of banks and non-bank credit institutions and decrees that they must obtain working license from the CBI. It explains all banking operations and services, sets regulations for the establishment of branches pertaining to foreign banks and sets limits to their investments. It also obliges credit institutions to provide viable information, puts in place a professional set of criteria for choosing new top-tier executives and board members and makes provision for setting up internal risk and auditing committees.
Defining banking contracts and the legal status of the newly-formed Association of Banks, launching credit rating institutions and detailing lending and capital adequacy capacities are among the other articles of the bill.
