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TEHRAN, Iran – Iran is in the news for its alleged development of its nuclear capacity, but there is another development going on. A credit union movement is growing rapidly and well. It is a movement reaching out to international organizations including the World Council of Credit Unions and the Association of Asian Confederation of Credit Unions, which it joined in the Islamic year 1384 or the western year of 2005. WOCCU representatives have made two trips to Tehran to talk with various officials. Chief Operating Officer Brian Branch and the then Chairman L. Bobby McVeigh were there in February 2005. In December 2005 Dr. Mo Varizi, CEO and president of Integrity Planners, went on a fact-finding and relationship building mission for WOCCU. Of Iranian descent, Varizi speaks Farsi as well as other Middle Eastern Languages which facilitates communication. Of its 68 million citizens, 419,000 Iranians belong to credit unions. About 40% of the population lived below the poverty line in the year 2002 according to the CIA Fact Book for the country, but there seems to be no direct relationship between income and credit union membership. The median age for the population is 24 years. The economy of Iran is very different from the United States. Their underground economy is not considered an aberration “but a natural offshoot of its `Islamic’ ideology and its unique political structure,” Vaziri said in his report to WOCCU. The economy is divided into the government, private and co-operative sectors. Credit unions are considered financial cooperatives. In a country with 6,000 years of history, the idea of co-operatives is deeply embedded in the society. Over 90,000 cooperatives operate in all phases of the society and are overseen by a Ministry dedicated to fostering their development. The Iranian constitution, one of the few in the world to do so, recognizes and encourages cooperatives to provide better working conditions and to strengthen the society as a whole, according to Tahereh Farrokhi, advisor on cooperative international relations. Part of Farrokhi’s responsibilities is to foster Iranian credit unions’ involvement with other credit union movements. There are 1,579 credit cooperatives in Iran. There are a number of official organizations overseeing these organizations. Farrokhi explained the structure. The Credit Cooperatives Unions of Iran is at the top. There are three provincial credit union organizations. Credit unions are divided into employee, government, teachers and other social group categories. The Ministry of Co-operatives and the Central Bank oversee the regulation of credit unions, although Farrokhi says one of the problems facing credit unions is adequate supervision, something Vaziri echoed in his WOCCU report. Many credit unions are trying for ISO 9001 certification as a method of financial control. Neither WOCCU’s PEARLS or the Basel Accords seem to figure in the controls of credit unions, although ACCU has discussed PEARLS with the movement. Members of individual credit unions elect a committee to audit their credit unions. If 20% of the members request it, the Ministry of Cooperatives will audit the credit union. A discussion of regulation with the Central Bank and the Iranian parliament was also part of Vaziri’s mission. The Ministry also works with the Department of Training and Research to offer technical assistance to requesting credit unions. Like in other countries, size varies. The Samen Credit Cooperative, with 320 branches throughout Iran, and M.A.M., with 200 branches, are two of the largest. According to Islamic law credit unions cannot charge interest but they do issue Qard al Hasanah, interest free loans. Although credit unions do not issue checks as banks do, they do offer many of the same services such as ATMs. Farrokhi is hoping that within five years credit unions will have 25% of the financial services market. “Cooperative activities are deeply rooted in our society and religion,” she says. Vaziri echoed her sentiments: “By the end of economic plan No. 4 (two years from now), the cooperative sectors should grow to 25% of the total economy. Financial cooperatives are leading the way for such movement and harmonizing their banking activities with the cooperative principle with the sophistication of modern banking system.” He issued a caution. “However, lack of proper regulatory authority is creating financial risk factors for the members.” He hopes that with affiliation to WOCCU, Iran will lead to other alliances of Muslim countries with the world credit union movement. -

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