Minister of Economic and Finance Affairs Masoud Karbasian announced that Iranian banks have about eight months to end their non-banking activities for which they have constantly come under fire. According to Karbasian, banks will need the help of the country"s capital market to shed their non-banking ventures.
"Based on the law on removing hurdles in the way of production, banks must stop their non-banking activities by the end of the third month of the next fiscal year [June 21, 2018] and it is my serious expectation that the stock market must assist with this process," Karbasian was also quoted as saying by the official news portal of the Economy Ministry.
Emphasizing the importance of the role of capital market, the minister noted that banks are often the first in line to fund different sectors, but they are unable to go beyond a certain capacity as they face a credit crunch.
"My first decision and duty is to eliminate the non-banking activities of banks and to do so, they must link up with the capital market," he said.
Karbasian made the remarks during a meeting with the chief executives and board of directors of the country"s four stock markets, namely Tehran Stock Exchange, Iran Mercantile Exchange, Iran Energy Exchange and Iran Fara Bourse Company, as well as director of the Securities and Exchange Organization.
Most banks are currently cut off from the capital market, as they struggle to finalize their balance sheets and hold their annual general meetings on time, a two-year affair that is partly rooted in a disagreement between the Central Bank of Iran and the Audit Organization of Iran over who gets to set financial reporting standards.
But Karbasian and CBI Governor Valiollah Seif have since reached an agreement that officially puts CBI in charge, meaning that banks could potentially have their symbols in the capital market unfrozen in the foreseeable future.
The administration of President Hassan Rouhani has repeatedly stressed the importance of returning financial institutions to their original mandate, and obligated them to shed their excess assets and stop activities in the ailing housing sector.
Source: Financial Tribune - Date: (31 October 2017)