A long-awaited bylaw seeking to boost supervision over the establishment and management of private credit institutions was approved after a six year delay.
The government on Saturday announced that it issued Article 44(5), proposed by the Central Bank of Iran and approved by the Money and Credit Council.
According to Article 44(5), private banks and credit institutions, financial intermediaries, and state-owned lenders that have offered their shares in the stock market, whether established before or after the ratification of the new law, are only to operate in the form of public companies or cooperatives.
The law was first approved in the parliament six years ago but never enforced by the Ahmadinejad administration.
Es’haq Jahangiri, the vice president, has now called on the ministry of economic affairs and finance, the CBI and the Management and Planning Organization to enforce the legislation.
Under the law, maximum allowable stakes have been set at 5 and 10 percent for institutional and non-institutional investors, respectively. The rule applies to both direct and indirect ownership in public companies, cooperatives, and non-governmental institutions. Any deals above the set maximum stakes shall be automatically nullified.
Officials hope the law will help shed light on illegal activities in private credit institutions.
