Given the fact that the Central Bank of Iran cannot properly monitor the activities of the credit institutions they continue to increase interest rates on deposits, CEO of Iran Zamin Bank, Kamal Seyedali, said on Sunday.
The interest rates which they offer are nearly 13.5 percent higher than the rates which official banks are allowed to offer, thus commercial banks are unable to compete, ILNA reported.
Seyedali also said that none of the Iranian banks have abided by the regulations the CBI issued earlier urging them to stop doing business with credit institutions involved in illegal activities.
Although the CBI has been pressing the case, all major banks still eagerly wish to carry on their business with the institutions to attract their financial resources.
The credit institutions do not submit clear records of their activities or any periodical reports and are not regularly controlled by the CBI. Despite all that, given the high interest rates which they continue to offer, financial resources stream toward such institutions, and banks consequently struggle with insufficient capital.
Additionally credit institutions do not pay their reserve requirements to the CBI nor do they adhere to capital adequacy standards.
The foremost need is for the credit institutions to be regulated, the official stressed. “Given the fact that people’s money has been trusted with them, they cannot simply be shut down. The issue is very sensitive and must be cautiously addressed in order not to raise public dissatisfaction.”
