Special Committees Reimbursing Depositors of Shadow Banks

EghtresadOnline: Four special committees are pursuing the liquidation of the last remaining illegal credit institutions and their main task is to identify the assets of these entities for auction, a deputy Majlis speaker said.

News ID: ۷۸۲۵۴۹

12 May 2018

Masoud Pezeshkian also told ICANA, the parliamentary news website, that the four committees include representatives of the government, judiciary, credit institutions and depositors, which are currently working to compensate depositors of the four struggling lenders, namely Alborz, Vahdat, Arman and Caspian.

“At the latest meeting of the heads of the executive, judiciary and legislative branches, it was emphasized that representatives of depositors are taking part in committees because they have a bigger concern over the sale of these companies’ assets,” Pezeshkian said.

Shadow banks, which spawned in the 1990s and mushroomed in the next decade by offering high interest rates, 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 Financial Tribune.

According to President Rouhani, whose administration initiated the crackdown on shadow banks, CBI has so far spent 115 trillion rials ($2.73 billion) to bail out depositors who lost their money in these entities.

A high-level task group has been established at the behest of the Supreme National Security Council following a suggestion by CBI 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, interior and intelligence ministries and the country’s Prosecutor General’s Office, has a higher mandate that covers the organizing of exchange shops, credit institutions, leasing companies and interest-free funds within six months.

Pezeshkian called on the judiciary to bring legal charges against the owners of shadow banks since they have caused a host of problems for the people.

“Those who have caused many problems for the country and the people should not go about freely, or be detained without a verdict,” the lawmaker said.

A report by Majlis Research Center has made several suggestions to prevent the creation of shadow banks. Among other things, the thinks tank suggests that CBI exercise utmost vigilance when granting permits to banking institutions, pass legislation to fill the legal vacuum, order all banks and agencies (both private and state-run) to stop working with shadow banks and create an asset management company to protect the rights of depositors without dipping into the coffers of CBI.