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Majlis Moves Ahead With Own Banking Reform Bill

The Comprehensive Banking Bill has been devised by the Majlis, based on studies conducted by the government.The Comprehensive Banking Bill has been devised by the Majlis, based on studies conducted by the government.

Lawmakers will debate the Comprehensive Banking Bill during a plenary session on Sunday, said Mohammad Reza Pourebrahimi, a member of the Majlis Economic Commission. 

“Parliament has been waiting for the government to submit the Banking Reform Bill. But it has not been sent 45 days after it was due. More foot-dragging is not acceptable and the parliament is set to discuss the comprehensive banking reform plan next week,” banker.ir quoted him as saying on Wednesday. 

Disagreement between the Ministry of Finance and Economic Affairs and the Central Bank of Iran is the main cause of the delay in submitting the bill, Pourebrahimi said without elaboration. 

The Comprehensive Banking Bill has been devised by the Majlis, based on studies conducted by the government. “It contains all the key issues that the government is trying to address,” he said.

“The plan was first developed by lawmakers in 2014. The current plan is the revised version of the initial version,” he said, adding that the current plan is more comprehensive than the government’s proposed bill. 

He said the government will be asked to comment on the motion and “no plan will be passed without the government’s consent.”

The plan aims to promote efficiency of banking contracts, according to the lawmaker. “There are problems about the performance of banks that has created problems for small and medium-sized businesses.”

“We need to make sure that all banking operations are usury-free,” he said, referring to recent calls for a review of banking rules and their adaptability with Sharia laws.  

The current law, Usury-Free Banking law, was passed 33 years ago. Bankers and economic experts have often called for reforms to the law to help improve efficiency of the lenders. The government has prepared its own Banking Reform Bill after the previous parliament failed to pass a controversial bill which had drawn fire from the government and banks. 

 The Banking Reform Bill outlines the duties of banks and non-bank credit institutions and decrees that they must obtain a 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 rules are among the other articles of the bill.

 

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