Iran: Five Stages of Public Bank Data Transparency

The Central Bank of Iran has unveiled the blueprint based on which state-owned lenders must make their financial data publicly available in line with the government's efforts to boost transparency in the financial sector.

With the goal of enhancing transparency, implementing Basel II and Basel III regulations and undertaking thorough supervision over banks and credit institutions, the Money and Credit Council approved "Regulations Overseeing Minimum Standards of Transparency and Public Release of Information by Credit Institutions" three years ago.

Later, the financial decision-making body headed by CBI Governor Valiollah Seif ruled that non-government banks and non-bank credit institutions must adhere to them.

The Basel regulations are a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector.

With the notification of regulations for private lenders, the eight state-run banks operating in the country were let off the hook, six of which are specialized banks, including the Export Development Bank of Iran and Bank Maskan, the lender specializing in housing sector.

However, at the start of June, MCC called on public-sector banks to publish data concerning their performance from the beginning of the next fiscal year (March 21, 2018).

Now, the latest MCC meeting has approved five phases, according to which different chunks of data must be published, leaving parts of the measures for 2019.

In the first quarter of next year (March 21-June 21, 2018), state-owned lenders will be obligated to publish information about any changes in their capital core, board members, CEO and chairman, and announce if any of their officials have been convicted for a crime.  

They will also have to disclose news about acquisitions, mergers or breakups. On top of that, lenders should report any losses resulting from embezzlement and provide information about the opening or closing of branches.

During the second quarter of next year (22 June-Sept. 22), state-owned banks are legally bound to publicly disclose information about their net loans categorized by criteria, deposit figures and recipients.

Furthermore, they will have to inform the public of their guarantees, letters of credit and negotiable instruments while disclosing the status of loans based on their repayment.

In the third quarter of the next fiscal year (Sept. 23-Dec. 21), banks owned by the government must publish data about the details of loans and the commitments of persons related to the loans, reveal information about any debts  by local and foreign credit institutions and disclose their lending from other banks.

They must also reveal conditions of their risk-based assets, volume and structure of capital and capital adequacy ratio.

The final two periods devised by the decision-making body consisting of 14 members go into the fiscal 2019-20.

The fourth period starts from March 21, 2019, and apparently has no limit. In this period, state-owned lenders are bound to disclose the reports of their board of directors to the shareholders' meeting and the audit review related to it, plus the legal inspector's reports to stakeholders.

They are also obligated to reveal information about corporate governance and internal controls, as well as policies and plans in line with managing various forms of risk in the future.

In the last phase, the timeline for which has not been specified, the remaining articles of the regulations are to be adopted by banks.

Publishing information of state-owned lenders is part of President Hassan Rouhani's strategy for instilling transparency and attracting foreign investors.

Another significant step was the executive order signed by the president, which mandates the transfer of all government accounts to the central bank in the next fiscal year.