The Money and Credit Council (MCC) has urged the Central Bank of Iran to take tighter supervision measures against banks and financial institutions violating deposit rate regulations.
The recent credit and monetary policy package passed by the MCC last Tuesday is aimed at reducing business financing costs. It also seeks to address other issues involving the banking system and money market. The package assigns certain obligations to each angle of the monetary triangle namely the banking system, the central bank and the government. CBI officials are concerned about banks and financial institutions offering deposit rates higher than the ceiling set by the council – 20 percent.
In the past, many among the 22 commercial banks and 7000 credit institutions violated the agreed deposit rate ceiling of 22 percent. The new policy package also requires the central bank to carry out a credit-rating system to categorize all banks and financial institutions, a move that officials hope will improve the banking environment.
Last Tuesday, MCC reduced the cap on one-year deposit rate by 200 basis points to 20 percent. The decision will be binding for all commercial banks from May 5.
