Central Bank Pursuing IFSB Conformity

In line with making up for lost time during the sanctions era and complying with banking standards, the Central Bank of Iran has been striving to conform to Islamic Financial Services Board standards in recent years, the CBI vice governor said.

“In recent years, the central bank has focused efforts on improving standards and regulations of banking oversight in accordance with documents and standards published by IFSB,” Akbar Komijani was also quoted as saying by the official news website of CBI.

The official, who was speaking at the opening ceremony of an IFSB workshop in Tehran, added that a significant portion of capital adequacy ratio rules for the Iranian banks recently published by CBI was based on the IFSB-5 standards.

“What is more, regulations over the minimum requirements of liquidity risk management that are to be communicated to the banking system in the foreseeable future have been devised based on the IFSB-12 document,” he said.

As Komijani outlines, the central bank has increased interaction with IFSB and is actively participating in the organization’ meetings and events in recent years.

IFSB is an international organization that issues guiding principles and standards within the banking, insurance and capital market sectors to promote stability in the Islamic financial services industry.

Based in Kuala Lumpur, Malaysia, IFSB began operations in early 2003and issues standards and principles in the areas of capital adequacy, corporate governance, risk management and transparency, among others.

Komijani noted that CBI has been increasingly employing the expert views of the international organization to improve the know-how and experience of its personnel.

“Three CBI personnel are now members of the standard-setting committee of the organization and a new member with the bank’s supervisory department will be introduced to join another task group within IFSB,” he added.

As Komijani says, since Iran “boasts the biggest Islamic banking system in the world”, it also has an active participation in the Prudential and Structural Islamic Financial Indicators project and regularly shares public data of Iranian banking system with IFSB to be used in their reports.

According to IFSB, the underlying purpose of PSIFI projects is to facilitate macro-prudential analysis and help assess the structure and state of development of the Islamic financial services industry.

Iran is a founding member of IFSB and has been one of its chief members since its inception.

Komijani noted that the implementation of standards published by the organization’s members, especially permanent members, is one of its goals.

Therefore, he stresses that this goal will not be realized unless expert meetings and workshops are held in target countries.

Komijani said the workshop was held in line with this goal and followed extensive negotiations with IFSB.

“The workshop was originally supposed to be held in 2016, but has been delayed as a result of budgetary limitations,” he said, adding that he hopes it would be the first of many such workshops to promote educational standards.

The 15th annual General Assembly and the 30th meeting of the council of IFSB convened in Kuala Lumpur, Malaysia, on April 6 and Komijani was a keynote speaker at the events, which also included other conferences and meetings held two days prior to the main event.

In mid-December, IFSB had announced the appointment of the Central Bank of Iran’s Governor Valiollah Seif as its chairman for 2017.