Parliament Getting Tougher on Shadow Banks

As the heated case of uncertified credit institutions drags on, the parliament has given the Central Bank of Iran until March 2018 to wrap up the case.

“Economy minister [Ali Tayyebnia] and CBI governor [Valiollah Seif] have until the end of the current fiscal year [March 20, 2018] to provide the parliament and Majlis Economic Commission with a comprehensive report detailing how all traces of uncertified credit institutions have been wiped away from the Iranian economy,” Mohammad Reza Pour-Ebrahimi, the head of the commission, told ICANA, the official news outlet of the legislative assembly.

The lawmaker asserted that if the problem of shadow banks persists after this deadline, it will indicate that the Economy Ministry and CBI “do not have the necessary courage” to solve the dilemma.  

What is more, the MP said after four meetings with Tayyebnia, Seif and CBI’s deputy for supervision, Farshad Heydari, to review the situation of the illegal credit institutions, the commission was left unimpressed and decided to approve Article 236 based.

Heydari had announced in May that the lengthy saga of uncertified credit institutions and the drama surrounding them will come to an end by the end of the current fiscal year in March 2018.

Article 236 states that if at least 10 members of the parliament or any of its commissions announce that the president, a minister or any officials in their subordinate entities have “not adhered to norms or have violated or refused to implement the law or have executed it incompletely”, proceedings leading to the official’s impeachment can start and the case will be sent to the judiciary.

Majlis Economic Commission has drafted a report to be read in the next open session of the parliament which, if approved by lawmakers, will be sent to the judiciary.

As Pour-Ebrahimi notes, this will be the first time that CBI violations will be sent to the judiciary by the parliament.

The official stressed that no excuses will be accepted from CBI, should it fail to meet the deadline.

The operation of shadow banks, which gathered pace during the tenure of the former administration, has sent shocks through the country’s financial system.

“It also eroded public trust and presented challenges to state-owned lenders,” he said.

 Security Commission Enters

According to the spokesman of Majlis National Security and Foreign Policy Commission, government officials will hold a joint meeting with commission members on July 11.

“In this meeting, which will be attended by the Economy Ministry, central bank, police and security officials, issues related to financial and credit institutions such as Caspian, Arman and Fereshtegan will be discusssed,” Seyyed Hossein Naqavi Hosseini said.

Noting that the presiding board members of the national security commission also held a meeting on Wednesday, Hosseini said the level of attention to uncertified credit institutions has “created a severe social dilemma” and therefore finding a “precise and administrative” solution is of utmost importance.

Government spokesman and head of the Planning and Budget Organization, Mohammad Baqer Nobakht, has also weighed in on the issue, asserting that institutions without a permit must obtain one or be closed down altogether.