ولی اله سیف

The Governor of Iran’s Central Bank says unauthorized credit centers have been eradicated from the country’s economy.

In a social media post, Valiollah Seif said the issue of such institutions is traced back in the past decades, adding that financial suppression, artificial control of the interest levels below the inflation rate and the interference of centers outside the jurisdiction of the Central Bank allowed for the rapid growth of institutions under such titles as “credit cooperatives” and “loan-granting funds”.   

“Then they mushroomed across the country, opening numerous branches and attracting clients’ deposits with tempting interest rates way above the normal levels offered by state banks,” he wrote.

This, Seif says, significantly added to the number of the depositors, thus giving the institutions a large share in the cash market. According to Seif, people’s unawareness about the risks of such investment and their growing tendency toward depositing their assets in those centers only accelerated their nationwide spread.

All in all, those elements coupled with “lack of expertise, failure to observe professional principles and widespread corruption, pushed the institutions toward collapse and their failure to live up to the obligations given to the customers.” 

Seif wrote since the activities of the centers were in clear violation of the policy of “resistance economy”, the Central Bank decided to uproot them, initially by preparing reports and elucidating the issue to the Supreme National Security Council. “Then all relevant apparatuses decided to cooperate to crack down on those illegal institutions and end their activities forever.”

At the moment their days are numbered, Seif says, with only three of them left which will be soon closed after they gradually paid off their debts to the depositors.  

The Central Bank Governor offered his gratitude to the Judiciary, the Intelligence Ministry and the Police for their cooperation with the Central Bank on dislodging those illegal centers, noting that with their eradication, “positive ground will be prepared for the banking network to better implement its monetary policies.”

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