Economy, Business And Markets

Rate Cuts Officially Implemented

Rate Cuts Officially Implemented
Rate Cuts Officially Implemented

Mohammad Reza Hosseinzadeh, head of the Coordination Council of Public Sector Banks, announced that the implementation of new one-year deposit rates and short-term deposit rates officially came into effect on Tuesday.

“The council convened in the presence of CEOs of private and state-owned banks and it was decided that long-term deposit rates be set at 15% with short term rates falling somewhere between 10-14%,”   Hosseinzadeh said in a TV interview.

Stressing that the 15% rate is exclusive to long-term deposits, the banker said ‘’all bank CEOs have committed themselves by signing official documents to execute the directive starting Tuesday.”

In a meeting on June 12, CEOs of private banks and credit institutions agreed to offer a maximum 15% interest on one-year deposits, down from the previous 18%. The move came after the Money and Credit Council– the top monetary decision-making body – failed to discuss the issue of interest rates at its latest meeting, giving banks space to set rates as they see fit.

Public-sector banks soon welcomed the move, announcing they would follow the lead of private lenders in lowering the rates.

On whether or not measures have been devised and put in place to closely supervise unruly banks that still dream of sky-high rates, Hosseinzadeh said: “If any (bank) branches violate these terms, a report will be sent to the coordination council secretariat and the issue will be rectified.”

Last week, Bank Pasargad Iran became the first lender to announce that it had lowered its one-year deposit rates to 16%. Hossein Motamedi, EN bank’s CEO, also said his bank too will offer lower deposit rates and several other banks said they would follow suit.

In recent months there has been a lot of speculation about lending rates. According to Hosseinzadeh, “the next few days” will determine what the new changes would exactly entail. “We must pay attention to the interest of both depositors and manufacturers.” Lending rates should be such that they “don’t tie the hands of manufactures.”

  Central Bank of Iran governor, Valiollah Seif said on Sunday that banks will lower lending rates in the coming days, acknowledging that cutting loan rates would help industries and lift their production.