Economy, Business And Markets

Official Suggests 20% Deposit Rate Ceiling

Official Suggests  20% Deposit Rate Ceiling Official Suggests  20% Deposit Rate Ceiling

I f the deposit rate ceiling is set closer to 20 percent, two percent lower than the current rate, commercial banks would be able to comply, said Abdonasser Hemmati, head of the coordination council of state-owned banks.

The inflation rate now hovers at about 16 percent, while inner-banking interest rates are near 28 percent.

Citing Hemmati, Financial Tribune’s sister news website Eghtesad News said that many of the existing problems within the banking system cannot be solved if a workable solution is not put forth for providing banks with the resources the government owes them.

“Banks are currently incurring operational loss, as the amount of interest they pay is more than what they receive,” he said, adding that until such problems are solved, deposit rates cannot be reduced.

Last week, Mohammad Bagher Nobakht, presidential adviser for supervision and strategic affairs, signaled that “the government supports the idea of decreasing deposit rates” from the current maximum rate of 22 percent.

Tasnim news agency reported Friday that the issue is to be discussed in the Money and Credit Council’s (MCC) meetings in a matter of weeks.

As CBI Governor Valiollah Seif is currently in America to attend a spring summit jointly held by the International Monetary Fund and the World Bank Group, the settlement of the rate issue will probably be delayed for another two weeks, the agency predicted.

President Hassan Rouhani had commented on the long-debated issue of altering deposit and loan interest rates, asking the MCC to gradually prepare the conditions for aligning deposit rates with declining inflation.

In a recent meeting with CBI and other banking officials, the president said that the public needs to be able to trust the government and its monetary policies, adding that the current interest rates that manufacturing sectors are required to pay on loans are “inequitable.”

Although the issue has since been placed atop the MCC’s agenda, yet no tangible results have yet been achieved.