Economy, Business And Markets

CBI Fines Six Banks

CBI Fines Six Banks
CBI Fines Six Banks

A deputy governor of the Central Bank of Iran said six banks that defied the regulations of Money and Credit Council have been fined so far, one of which has been made to pay 800 billion rials ($30 million) in fines. 

Hamid Tehranfar said the violations have been mainly to do with the banks' failures in complying with regulations regarding interest rates on banking deposits, reported ILNA.

Tehranfar added that banks are reluctant to reduce interest rates to their depositors, in fear of losing their customers. 

The CBI official emphasized that if the banks continue violating the regulations of Money and Credit Council, the CBI will have to suspend their managers or members of their board of directors.

Meanwhile, he stressed that Iranian banks generally obey the monetary regulations, noting that illegal credit and monetary institutions are exceptions. 

The past few years' inflationary environment in Iran and the previous government's downward push on interest rates shifted deposits away from banks towards speculative markets such as the stock exchange. 

That is while the current administration increased the interest rate for banking deposits in a bid to gradually push it above the inflation rate which is currently slightly above 22%, contrary to former president Ahmadinejad's policies which advocated negative real interest rates.

The benchmark interest rate was last recorded at 22 percent. Interest rate in the country averaged 13.74% from 1973 until 2013, reaching an all time high of 19% in 1995 and a record low of 10% in 1979.