Call for Strict Monitoring of Shadow Banks

First Vice President Es'haq Jahangiri has called on the Central Bank of Iran to strictly deal with illegal financial institutions as part of the government's efforts to crack down on corruption.

He urged CBI to clarify the situation of unauthorized credit institutions and their depositors, as these institutions disturb the country's monetary system.

"The fight against corruption will continue in the next administration," Jahangiri said in a meeting of the Office for Combating Economic Corruption            on Tuesday, IBENA reported.

The vice president's urging comes as a number of lawmakers wrote a letter to President Hassan Rouhani on Tuesday, asking him to assess the situation of bankrupt credit institutions' depositors, especially Arman and Caspian, at the Supreme National Security Council.

They complained about the lack of response of officials and expressed concerns that the crisis might turn into a national threat.

The meeting on fighting corruption was also attended by other officials, such as Majlis first deputy speaker, minister of intelligence, CBI's governor, Tehran prosecutor and a number of MPs.

"All the country's three forces have shown determination during the past four years to fight corruption while the Office for Combating Economic Corruption has shown a good performance, especially in large-scale cases, and this approach will definitely continue during the next government's tenure," Jahangiri added.

Unlicensed institutions, which are active in the informal money market, reportedly hold 25% of the entire liquidity. They proliferated during the tenure of the former administration, continue to be the bane of banks and have proven extremely problematic for the current government since it was repeatedly forced to bail out depositors.

These institutions have also been recognized as one of the main reasons hindering a further decline in bank interest rate that currently stands above 15%, while CBI has stressed that it needs to have a gap of just 2-3% with the inflation rate, currently in single digit zone.

Judiciary Spokesman Gholamhossein Mohseni Ejei also emphasized the necessity of countering uncertified credit institutions, noting that "there should be a way for people to invest even small amounts of money in the production sector to keep them safe from unauthorized credit institutions".

The Money and Credit Council–a decision-making body–recently gave the central bank extra authority in addition to its legal mandate to implement “complete and all-encompassing oversight over monetary and banking institutions” and to “organize the informal monetary institutions and market”.