The harm done by unauthorized credit institutions within the banking network has gone so far that the Supreme National Security Council (SNSC) has now gotten involved in the process to enhance the supervision of the unregulated money market, Financial Tribune’s sister news website Eghtesad News reported.

The actions of over 6000 unauthorized credit institutions have disrupted the banking system since they do not uphold the Central Bank of Iran’s (CBI) regulations, the report said. The issue has been repeatedly criticized by experts, MPs, and banking officials,

The CBI has taken constructive steps to regulate the market, according to the bank’s supervision deputy governor, Hamid Tehranfar. “Needed policies have been set forth, and the path has been paved to regulate unauthorized financial and credit institutions, bureaux de change, leasing companies, cooperatives, and funds.”

What is clear, however, is that although regulating a number of 6000 credit institutions, each of which have been established for a certain goal, is not a matter which the CBI can deal with on its own.

CBI Governor Valiollah Seif has warned that “the public must be informed of the fact that trusting credit institutions that are not regulated by the CBI is a very risky business, and by entrusting their savings with these institutions customers are putting their assets at risk.”

The CBI governor has admitted that nearly 20 percent of the country’s liquidity lies with unauthorized credit institutions, stressing that the regulator is determined to expand monitoring of the sector, “thus other organizations, such as the judiciary and the law-enforcement forces will also cooperate.”

According to Tehranfar, regular meetings are held every week in which representatives of different organizations and the parliament’s research center discuss solutions for increasing supervision over unregulated credit institutions.

A new set of principles will be prepared over a period of six months and handed over to the SNSC for confirmation.

Source » financialtribune