Majlis to Pass Banking Reform Bill By March

The much-anticipated banking bill which takes on major reforms in the key sector will be finalized in the parliament before the current fiscal year is out in March 2017, the head of the Majlis Economic Commission said Saturday.

"The Banking Reform Bill will be approved in Majlis by the yearend," Mohammad Reza Pour-Ebrahimi was quoted as saying by banker.ir.

"The present Banking Law was approved in 1983 and should have been revised several times by now," he said in a joint meeting of lawmakers and provincial officials. "But that has not happened and with government help we now aim to review the new law and approve it by the yearend."

The present law that is to be replaced with the new legislation was dubbed the Usury-Free Banking Law and says that reviews should be conducted every five years. But despite this, the law has not undergone any major modification over the last three decades.

The lawmaker said revising the law has turned into a concern for the Leader Ayatollah Seyyed Ali Khamenei , President Hassan Rouhani, private businesses and the general public. "We will try to address these concerns in the new law."

Although it was supposed to be finalized during the previous administration in 2013, the draft version of the banking reform bill was sent to Majlis in April of this year.  

Simplifying banking services, improving efficiency, adjusting interest rates with real economic conditions and upholding Islamic banking norms are among the main measures envisioned in the bill.

In line with Islamic values, the bill proposes founding a body at the CBI to supervise banks’ compliance with Sharia-based regulations. The body would include the CBI governor, his deputy for supervisory affairs, five Muslim clerics with expertise in banking and monetary issues and a legal expert.

Pour-Ebrahimi says the bill is now under review in the government's economic committee and will be sent to the Majlis after approval by the government.

Keeping Abreast of the Times

Referencing to a recent study, he said the major problems of almost 85% of businesses in the country can be traced to the banking system. One of the most important factors in improving the situation, he says, is "the approval and implementation of Islamic banking laws with the help of international experience and expert opinions."

The senior lawmaker added that to compete in the "global economic war" relevant laws are a crucial necessity, and although problems persist "they are solvable."

Speaking about the banking reform bill in June, deputy economy minister Hossein Qazavi had said that in the bill banks and non-banking credit institutions have been defined explicitly and any institution wanting to enter the financial sector must obtain a license from the Central Bank of Iran.

"Penalties have been set for those who provide fake information when establishing a credit institution. To select CEOs and board members of banks and credit institutions, professional criteria have been defined."

Another deputy minister said on Saturday the government has been given a month and a half to send the Banking Reform Bill and the Central Bank Bill to the parliament.

Pointing to the Banking Reform Bill in a talk with Fars News Agency, Seyyed Mostafa Razavi said its first draft was approved by the Majlis in early October, "but the government was provided with a 45-day deadline in order to formally send the final version of the bill to the legislature."

The Central Bank Bill, which according to CBI vice-governor Ali Akbar Komijani "calls for legal independence for the central bank in various aspects, including organization and structure, budgeting and regulatory affairs", calls for improving and elevating the regulator's independence in several areas.

Apart from the Banking Reform Bill, the government has also embarked on its own reform of the banking system, the so-called banking overhaul plan.