EghtesadOnline: As part of efforts to organize the informal monetary market, particularly the unlicensed credit and financial institutions, a committee is to be formed at the Central Bank of Iran with the sole purpose of dealing with the fallout from these entities going bankrupt.
According to Masoud Pezeshkian, first vice speaker, the committee will be comprised of a group of experts in the fields of economics, banking and legal affairs.
Pezeshkian is a member of a high-level council representing the heads of the three government branches, namely the administration, the judiciary and the parliament, which is seeking an end to the years-long drama surrounding the activity of shadow banks. The decision to form an expert group was made in the last meeting of the council, according to Financial Tribune.
“The council also decided to reimburse depositors at the Caspian Credit Institution–a company made up of several smaller bankrupt micro-lenders–up to 1 billion rials ($21,900) and 2 billion rials ($43,800) ,” he said, adding that any reimbursement that exceeds this cap would be illegal.
These shadow banks, which were spawned in the 1990s and the next decade by offering high interest rates, had ties to powerful military and religious organizations and disrupted the country’s monetary market by acting as rivals of legitimate lenders. They were finally dismantled or merged with other banks by the administration of President Hassan Rouhani.
According to Rouhani, whose administration initiated the crackdown on these players–CBI has so far spent 115 trillion rials ($2.55 billion) to bail out depositors who lost their money in these entities.
A high-level task group was established at the behest of the Supreme National Security Council based on a CBI proposal to tackle the issue after the problem of shadow banks was deemed a threat to the financial and political stability of the country.
This task group, which is headed by CBI and comprises members from the Economy Ministry, Interior Ministry, Intelligence Ministry and the Prosecutor General’s Office, has a higher mandate to oversee exchange shops, credit institutions, leasing companies and interest-free funds within six months.
A recent analysis by Majlis Research Center has come up with suggestions to prevent the creation of new shadow banks.
Among other things, the thinks tank suggests that CBI exercise utmost vigilance when granting permits to banking institutions, legislation be passed to fill the legal vacuum, ordering all banks and agencies (both private and state-run) to stop working with shadow banks and creating an asset management company to protect the rights of depositors without dipping into the coffers of CBI.