EghtesadOnline: The Majlis Economic Commission has put in motion three plans to improve the country’s economic conditions, all of which concern the ailing banking system and will materialize in a matter of months, the head of the commission said.
“One of the things that the commission is pursuing is the dependence of central bank,” Mohammad Reza Pour-Ebrahimi, who helms the commission, told ICANA, the official news outlet of the parliament.
As the MP pointed out, a background of “serious disagreements” exists concerning the hot-button and long-delayed issue among the parliament, the powerful Guardians Council and the influential Expediency Council.
Pour-Ebrahimi elaborated by saying that lawmakers finalized their plan last year, but the GC, which acts as Iran’s highest constitutional decision-maker, compared the plan with the constitution and ruled that it does not conform with Sharia or Islamic law, Financial Tribune reported.
Later, the EC made even “worse decisions” that effectively undermined the original independence envisioned for the monetary regulator in the parliament’s plan, he added.
“These issues have been corrected in the new law and we will pursue this in the form of an amendment to the central bank law to be approved and finalized in the parliament’s open session by the end of the year [in March 2019],” Pour-Ebrahimi promised.
As for MEC’s second plan, the lawmaker said the commission is actively pursuing the creation of Iran’s first development bank. He did not provide any specific details concerning the bank’s potential workings and specific field of work.
According to Pour-Ebrahimi, Mohammad Hossein Hosseini Bahreini, head of MEC’s Monetary and Financial Committee, is the main guy behind the plan who has finalized the first draft of the plan to establish the development bank.
“The bank wishes to tap into the potentials of the National Development Fund of Iran as well,” he said, adding that negotiations are underway with the government.
He noted that Bahreini has held meetings with Central Bank of Iran Governor Valiollah Seif and Minister of Economic and Finance Affairs Masoud Karbasian concerning this issue and it has been decreed that negotiations will also be held with First Vice President Es’haq Jahangiri.
Pour-Ebrahimi further said the third initiative of MEC is a general reform plan for the beleaguered banking system.
Majlis Research Center, the main parliamentary think tank, has presented a final report on methods of organizing the banking system and a team is currently working to finalize the plan.
“In this initiative, we want to improve the condition of local banks in terms of balance sheets and reclaim non-performing loans through short-, medium- and long-term plans,” the MP said.
The government and parliament have been promising major bank reforms, for which there is consensus over its absolute necessity, for years without any tangible result. The reform plans were supposed to yield results before the previous fiscal year ended in March 2018, but the country’s foreign currency crisis of the past few months grabbed the spotlight.
Bahreini, the MP behind the idea of establishing a development bank, is one of the main banking figures of the parliament. A two-term lawmaker and a cleric, he is the main designer of the parliament’s bank reform plan.
Lawmakers started devising their own bank reform measures more than a year ago after the government failed to meet its deadlines of submitting its twin bank reform bills. Latest indications are that lawmakers will use their own blueprint as the basis for bank reform, but will fill the holes with government proposals.