MPs to Question Rouhani on Unregistered Lenders

Lawmakers intend to propose a motion to question President Hassan Rouhani over his government’s poor regulatory oversight over the banking industry and failure to crack down on unlicensed lending institutions.  The motion asks Rouhani to explain what measures his administration has taken to address the problems of bankrupt credit institutions’ depositors, especially Arman and Caspian, Tasnim News Agency reported on Tuesday. Lawmakers have expressed concern that the drawn out crisis of insolvent credit and financial institutions could turn into a national crisis.

Unlicensed institutions, which are active in the informal money market, reportedly hold 25% of the entire liquidity. They cropped up like wild mushrooms during the tenure of the former government and are a bane of banks.  Their very existence poses a big and unending challenge to the government since it has been repeatedly forced to bail depositors who keep their savings with the dysfunctional, mismanaged and unaccountable lending institutions. These institutions backed by vested interests are partly to blame for the failure of the Central Bank of Iran to cut bank interest rates that currently stand around 10%.