EghtesadOnline: The Central Bank of Iran’s latest report on the transfer of state accounts to CBI has shown that 84% of the designated entities have participated in the scheme that promises more transparency and discipline in public finances.
According to CBI’s website on Wednesday, of the 1,061 entities included in the scheme, 888 of them have opened an account with the monetary regulator.
The government’s decision to move its accounts from agent banks to CBI was announced on August 2016, in line with its policies to promote transparency and avoid dodgy practices related to the expenditure of public-sector organizations.
The scattered government accounts across different lenders in the past made it pretty difficult to supervise them properly and, therefore, a number of banks labeled them as private resources and used them for loan allocation. This led to an unhealthy relationship between account holders and the banks, according to Financial Tribune.
However, CBI, as the banking regulator, is legally entitled to provide banking services to all public-sector organizations and all state bodies are obliged to deposit their money at CBI.
The provision had originally been included in the Fifth Five-Year Development Plan (2011-16) but due to the lack of proper infrastructure, CBI had been forced to move the government’s accounts to a number of agent banks, both public and private.
According to CBI’s statement, the account transfers since the beginning of the current year (started March 21, 2017) registered a 40% growth.
The bank states that in the course of the current year, it has taken concrete steps to organize state accounts which, in the first stage, targeted reforms in national payment systems to conduct the account transfers with utmost accuracy.
In the second phase and considering the fact that the central bank is based in Tehran and state bodies are scattered throughout the country, two things were done.
First, it upgraded the security of electronic check payment system (known as Sayyad) and simultaneously benefited from government-owned banks that have the highest number of branches, including Bank Melli, Bank Sepah, Kesahvarzi Bank and Post Bank of Iran, with Bank Maskan joining the list soon.
The second measure to enhance the procedure was the strengthening of electronic transfer systems to facilitate the transfer of government funds from one account to another.
Cash Transfer System
The CBI noted that as part of the new measures, not only the salaries of government employees are remunerated through the central bank, but also the account of the Organization of Targeted Subsidies, which oversees the payment of cash subsidies to millions of Iranians, has been moved to CBI.
“And now the online reporting of transactions [of state accounts] to their holders can take place, something that CBI regards as the last stage of its undertakings,” it said.
As part of the Subsidy Reform Plan, the previous government removed food and energy subsidies in 2010 and paid 455,000 rials ($9.4) to each and every Iranian on a monthly basis. The controversial plan has been retained by the administration of President Hassan Rouhani.
The central bank has been considered as the sole entity in charge of providing the infrastructure for transferring government accounts and exerting active online supervision over them while all state-related entities have been legally required to conduct their banking transactions through accounts opened with the central bank and Nasim–CBI’s core banking system.
According to the CBI statement released in December, the country’s Armed Forces, including the army, the Islamic Revolutionary Guards Corps and the police, are not obliged to move their accounts to the central bank and are allowed to keep their accounts with agent banks i.e. banks that have clinched agency deals with the central bank for now.
“Credit institutions” i.e. banks, non-bank credit institutions, Qarzol-Hassaneh (interest-free) funds and credit cooperatives under the direct supervision of the central bank, in addition to state-owned insurance companies, are currently exempt from transferring their accounts until further notice.