Banking Bill Awaits Clerical Approval

The revised version of Banking Reform Bill will be presented to top clerics–known as  Marja’ or sources of emulation–ahead of being put to a final vote in the parliament, announced the head of Majlis Economic Commission.

“Parts of this law are related to principles of jurisprudence and Islamic law, so in order to reform banking concepts and make them conform to Islamic standards, the Banking Reform Bill–aka Usury-Free Banking Bill–will be sent to top clerics before its approval in the Majlis,” Mohammad Reza Pour-Ebrahimi also told Mehr News Agency.

The lawmaker, who was in the holy city of Qom with other members of the commission to confer with the clerics, noted that the Usury-Free Banking Law was first approved in 1983.

“It was decreed that the law be implemented on a trial basis to be subsequently revised, but that has not happened to date,” he said. “Now it has become a major problem of the country’s economic system and given rise to many issues.”

Pour-Ebrahimi noted that as a result of concerns and doubts raised by Shia clerics in recent years and “the problems facing the people and businesses”, a working group was formed in the previous parliament to address the issue.

“The draft of the new Banking Reform Bill was devised then and now we are completing it in the current parliament as one of the most important legislations,” he added.

The Banking Reform Bill, which is to replace the Usury-Free Banking Law, defines the duties of banks and non-bank credit institutions. It stipulates that they need to obtain working licenses from the CBI.

It explains all banking operations and services, as well as regulations for the establishment of branches pertaining to foreign banks, and sets limits to their investments.

The bill also obliges credit institutions to provide information, puts in place a 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.

 A version of the bill, drafted by the previous parliament, drew strong criticisms from the government and experts. The bill was finally repealed and passed on to the current parliament for further discussions.  

As Pour-Ebrahimi has announced before, the bill will be finalized in the parliament before the end of the current fiscal year in March 2017.