Majlis Commission Underpins Central Bank’s Oversight

The joint Majlis commission for reviewing the sixth economic development plan (2016-2021) has passed a measure allowing the Central Bank of Iran to exercise its supervisory and disciplinary authority over banks and non-bank credit institutions, the commission’s speaker said. The move grants the regulator the long-delayed legal instrument to tackle violations in the banking system and operations of lawless financial institutions.  

“Based on the commission’s directive in the first clause of Article 27 of the next economic development plan, to form and implement a complete supervisory and disciplinary capacity for the central bank over the market and monetary, credit and banking institutions and to regularize the informal money market in order to improve transparency and reduce the ratio of non-performing loans to total loans, the CBI is hereby allowed – beyond its legal mandate cited in the monetary and banking laws of the country – to invoke supervisory and disciplinary measures on lawless banks and non-bank credit institutions within the framework of regulations that are approved by the Money and Credit Council,” Mohammad Khodabakhsi told ISNA on Monday.

As part of the commission’s directive, the CBI has acquired a series of supervisory and disciplinary capabilities which include exerting a fine of up to 1% of the bank or non-bank institution’s last registered capital proportional to the level and kind of violation it has committed. The penalty will be provided from the shareholders’ dividends. Other penalties include revoking licenses and disregarding the professional qualifications of executives and board members.

The sixth plan, yet to approved by the Parliament, outlines government strategies in its budgeting for the next five years.

 Judicial Duties

“In chapter 28 of the plan, the judiciary is obliged to take certain measures,” says the lawmaker. “These measures should be in line with increasing accuracy and speed of providing judicial services and dispensing justice, Islamic human rights and civil rights, betterment of quality, reducing the bureaucracy, creating equal opportunities for the general public to have access to judicial services and prevent crime and reduce the number of offenders.”

According to Khodabakhsh, the judiciary is bound to take action to improve indices of judicial and legal development by 2021 as part of the commission’s new directive.