Iran Majlis to Vote on Banking Reform Bills

EghtesadOnline: The Majlis speaker says reforms to the central bank law proposed by the government to overhaul the dysfunctional banking system has been reviewed in the relevant committees and is awaiting a final vote in the chamber.

News ID: ۷۴۶۲۹۳

04 December 2018

The bills were sent to parliament more than a year ago. The Banking Reform Bill that would replace the current decades-old Usury-Free Banking Law, outlines procedures for banks and credit institutions for obtaining a license from the CBI.

It also explains banking operations and services, notifies regulations for the establishment of foreign bank branches and sets limits on their investments, according to Financial Tribune.

"The Majlis Research Center had earlier warned about banking challenges and proposed measures for addressing the problems," Ali Larijani said on Monday.

"But regarding some issues, like high interest rates that undermine the banking sector, direct government intervention is essential," he added.

On the other hand, the reform bills aim to update banking regulations. Improving the independence of CBI, enhancing monetary policy and improving CBI supervision over the money market are among its key goals.

Addressing a press conference, Larijani said the liquidity is one of the main economic hurdles and that is why the Majils allowed the government to sell incomplete development projects to the private sector.

"Doing so will not only contribute to economic prosperity but would absorb the huge liquidity", he said.

Prospects for Pension Funds

Studies and investigations undertaken by the MRC paints a clear picture for the struggling retirement funds, the senior lawmaker said.

In 2017, the research arm of the Iranian Parliament conducted a thorough study on the dire condition of Social Security Organization–the country's largest pension fund–and offered short- and long-term roadmaps to steer the entity away from a full-blown crisis.

The parliamentary think-tank asserted that studies show SSO will face serious crises in the near future.

According to MRC, declining birthrates and an aging population have led to a significant rise in the number of pensioners.

"We included an amendment in the current fiscal budget calling on the government to repay the debts of the retirement funds. It is regrettable that the government has still not complied.”

The mounting problems of pension funds are one of the main challenges the country is saddled with.  Earlier in the year, a lawmaker warned that bankruptcy threatens most retirement funds saying that of the 20 funds paying retirees 18 are insolvent.