Legal vacuum to deal with troubled banks

According to experts, the prerequisite for any corrective action is the existence of sufficient laws and regulations to carry out reforms. In the current situation, such laws are not at the disposal of regulatory institutions, and the existing laws are not enough to solve banking problems, even for drafting the introduction of a banking law. Also, in the current commercial law, there is no specific definition for topics such as merger and liquidation, and no mechanism has been defined for these two categories. It should be noted that the issue of bank bankruptcy is one of the sensitive issues in the economy of any country and its prerequisites should be considered.

In recent days, the discussion of dealing with troubled banks and credit institutions has been heard. While organizing the banks that faced the challenge is a necessity, the type of dealing with these banks should be such that the banking system and the economy do not face more difficulties. It seems that some banks have had stagnant assets and the productivity of these assets will bring their situation back to acceptable conditions. Of course, the type of dealing with these banks should be in accordance with the country’s banking laws, and it should be seen whether there are legal capacities to liquidate these banks or not.

According to experts, the prerequisite for any corrective action is the existence of sufficient laws and regulations to carry out reforms. In the current situation, such laws are not available to the regulatory bodies, and the existing laws are not enough to solve banking problems, even for the introduction of a banking law. Also, in the current commercial law, there is no specific definition for topics such as merger and liquidation, and no mechanism has been defined for these two categories. It should be noted that the issue of bank bankruptcy is one of the sensitive issues in the economy of any country and its prerequisites should be considered. In the past months, America was also faced with the bankruptcy of a number of banks, but in the crisis of 2008, it was able to overcome the crisis by supporting the big banks and gradually implement the reforms needed by the banks.

Another important point to be noted is that some critics emphasize that the main problem of liquidity growth is the existence of private banks, and by providing the wrong address, they are trying to nationalize private banks and ultimately the entire economy. This is contrary to the General Policy Law, Article 44, and the emphasis on passing through the state economy. In recent days, the Ministry of Economy announced in a statement that “one of the most important reasons for the increase in the government’s debt to the banks is due to the registration of 160 thousand billion tomans owed to the government by Bank Sepe. In fact, when Ansar Bank, Qawamin, Hekmat Iranian, Mehr Ekhtezat and Kausar Institute were merged into Sepah Bank, Qawamin Bank had a high disparity, and the majority of this disparity was caused by doubtful receivables and overdues.

At the time of the merger, the government assumed the time to repay the shortfall in assets and liabilities, but did not compensate it, and Sepeh Bank did not include these claims in its financial statements. At the end of 1401, Sepe Bank suddenly recorded a figure of 160 thousand billion tomans as claims from the government in its account. This example also shows that the process of merger or liquidation, without careful study, causes the risks of the banks’ balance sheet to be transferred to the government’s balance sheet. Another point that should be taken into account is that there should be transparency in the process of liquidation or merger of banks, and it should be emphasized that during the process of reforming banks, the phenomenon of withdrawal of deposits from large banks should not be keyed. This is a big risk for financial stability. One of the government’s challenges in the budget is the generation of government revenues, which the economic team of the 13th government emphasizes.

It seems that the productivity of banks’ assets and the withdrawal of toxic assets can also improve the conditions of many of them. But the danger that threatens the country’s banking system is that the government’s dominance over the banks will increase under the pretext of liquidation and reform of the banking system, and on the other hand, the government will want to hand over part of the banks’ shares to its subordinate institutions. A danger that has been faced by many successful factories in the country and has caused losses to banks by confiscating them and handing over their shares to government companies. It should be noted that the discussion of liquidation or bankruptcy of banks is a very important and at the same time sensitive issue that should be done in accordance with successful experiences and on the correct legal basis, and the selective behavior of banks will aggravate the problems of the banking system.

Source: World Economy