Iran's Central Bank has taken over management of Mellal credit institution after the company failed to meet regulatory standards despite repeated corrective measures, Ettelaat reported on November 16.

The Central Bank's Supreme Council invoked Article 30 of the Central Bank of the Islamic Republic of Iran Act to strip powers from Mellal's general assembly, board of directors and executive board. The decision, approved at a meeting on November 11, aims to protect national economic interests.

The takeover follows unsuccessful attempts by regulators to bring Mellal into compliance through supervisory actions, disciplinary measures and restructuring programmes.

The institution's board failed to implement required reforms, leaving key prudential and supervisory indicators below acceptable levels.

A temporary supervisory board appointed by the Central Bank assumed control of Mellal's operations on November 15. The regulator said financial statement reviews indicate the institution's capital and liquidity ratios can return to acceptable levels once planned reforms are implemented.

Banking sector reform has been amongst the Central Bank's top priorities in recent years, focusing on addressing imbalances at institutions with weak operational and supervisory performance. The regulator has used powers under the new Central Bank Act to take preventive and corrective action against banks that violate prudential limits.

The Central Bank assured depositors and stakeholders that Mellal will continue normal operations under the appointed supervisory board's guidance, with no interruption to services. The institution is expected to return to compliance as a balanced credit institution serving Iran's monetary and banking system.

"This action by the Central Bank is intended to protect public interests and rights, and there should be no concerns regarding the continued operation of the credit institution," the Central Bank said in its statement.