Jurisprudence Council on the Anvil

EghtesadOnline: The Central Bank of Iran is closer to establishing an Islamic jurisprudence council, as the Guardians Council, the entity in charge of ensuring the compliance of key ratifications and candidates with constitutional precepts and Islamic law, has approved some of the new council’s nominees.

News ID: ۷۸۳۸۶۲

02 September 2018

According to GC’s executive deputy, Siamak Rahpeyk, the CBI introduced six jurists or experts in Islamic jurisprudence when the former CBI governor, Valiollah Seif, was still in office. Seif was replaced by Abdolnasser Hemmati on July 25.

“Of this number, the eligibility of four jurists was approved after conducting interviews to review the possibility of their membership in the jurisprudence council,” he told Tasnim News Agency.

“Only one person remains to be introduced to the bank as member of its jurisprudence council,” Financial Tribune quoted him as saying.

Rahpeyk pointed out that GC rejected a number of candidates introduced by the central bank, as they were not well-versed in jurisprudential guidelines.

Proponents of Islamic banking and religious figures in Iran’s financial scene have been calling for the formation of the jurisprudence council to implement Islamic banking guidelines that revolve around risk sharing instead of paying outright bank interests that amount to usury prohibited by Islam.

This is while Iran’s banks are currently allowed to offer 15% interest on deposits. However, they pay yields much higher than the legally allowed cap to stay afloat amid a serious credit crunch problem.

Based on an article in the Sixth Five-Year Development Plan (2017-22), the jurisprudence council of the central bank may be legally established. It will be mainly tasked with the way the regulator exerts supervision over banks and how well they implement Islamic guidelines. Most importantly, the council will have a say over deposit interest rates and their compliance with Islamic law.

The GC member said one of the most fundamental functions of the central bank jurisprudence council is to define Islamic conditions and regulations for setting bank interest rates.

“The council’s activities will begin after all its members are approved,” Rahpeyk said.

Based on the law, members of the new council consist of the central bank’s deputy governor and deputy for supervisory affairs, a chief executive of a bank and a member of Majlis Plan and Budget Commission who will be selected after a parliamentary vote. This is on top of five jurists introduced by the central bank to the Guardians Council.