Economy, Business And Markets

Private Sector Wants Say in Financial Decision-Making

Private Sector Wants Say in Financial Decision-MakingPrivate Sector Wants Say in Financial Decision-Making

A motion proposed by parliamentarians aimed at reforming the ailing banking system reportedly excludes the limited authority the private sector currently has in financial decision-making, which has been met with the strong disapproval of business figures.

The latest monthly meeting of the Money and Capital Market Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture was held on Monday in Tehran to discuss the process of evaluating the bill and review a law aimed at boosting the Iranian capital market, the official news portal of ICCIMA reported.

“According to current regulations, the Money and Credit Council boasts a standing that goes beyond any government branch and sets the policies of the country’s monetary system with the presence of influential representatives of this sector, but in the motion that has been proposed by the MPs, a high council replaces MCC,” Kourosh Parvizian, the head of the commission, said.

The administration of President Hassan Rouhani has devised the Banking Reform Bill and the Central Bank Bill that have been long gestating and aimed at upgrading the current banking system that ails from outdated regulations.

Following an approval by the Cabinet and a presidential endorsement, the president officially delivered the twin bills to Majlis Speaker Ali Larijani on August 15, but the rocky journey of the bills and repeated delays angered many lawmakers who have also drafted their own version of the reform agenda.

As Parvizian outlined, the motion transforms the supervision department of the Central Bank of Iran into an independent body within the bank.

It also gives another new role to CBI as a special council and advisor to the administration.

The annual general meeting of the central bank is held to approve the financial performance report and its balance sheet in the presence of the president under current regulations, but as Parvizian notes, the responsibility of holding that meeting is to be entrusted to the aforementioned high council.

“The Audit Organization of Iran will also be introduced as the independent auditor of the central bank,” added the official, who also heads the Association of Private Banks and Institutions.

Parvizian is also concerned that the motion “does not consider any role for the private sector, meaning that the private sector will have no say whatsoever in devising policies in the financial sector”.

Mohsen Haji-Baba, the deputy chief of ICCIMA’s commission, stressed in the meeting that since the government repeatedly announces that it fully supports the private sector and wishes to expand its role, it should put that in practice.

“For instance, if it is decreed that three expert economists are to be present in the High Council of CBI as part of the new motion, these people should be introduced by the Iran Association of Economists [a non-government entity],” he said.

Or else, he added, if a legal expert in banking affairs is to sit on the high council that would make the most important financial decisions for the country, that lawyer must be nominated by the Iranian Bar Association, another private institution.

Maintaining and improving the independence of the central bank was another point emphasized by the head of the ICCIMA commission.

“CBI goes beyond any other government executive bodies and defines the frameworks of the banking and foreign exchange regimes of the country, so it is imperative that its independence be the hallmark of any reform motions,” Parvizian concluded.

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