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Private banking now under a cloud.

The future of private banking in Iran is under a cloud as the state has moved in recent weeks to shutter three of them.

All banks were nationalized by Prime Minister Mehdi Bazargan right after the revolution. But the free enterprise attitude that prevails prompted the state to authorize private banks in the 1990s. The first private banks were created in 2001.

But the private banks hold only about 20 percent of all the deposits in Iran.

And now they are under a cloud.

News reports say the Central Bank will soon dissolve the Tat Bank after having withdrawn the licenses for the Ariya and Ariyan Banks.

There has been no official explanation of what is going on. The daily Etemad said, "The result of this type of information is nothing more than to destabilize the newly established private banking system."

On top of that, news reports say the Central Bank forced many private banks to cough up large sums in the closing days ofthe last Persian year in March. The sums and the purpose remain foggy--as do the plans for repayment.

Concluded Etemad, "It seems we will witness a new era of reduced trust in the private banking system, although the main capital of the banks is public trust."
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Title Annotation:Economy: Money and its impact
Publication:Iran Times International (Washington, DC)
Date:May 18, 2012
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