CBI Unsatisfied With Interest Rates

The current lending rates are not favorable to manufacturers and the Central Bank of Iran is working to ensure the rates move on a downward trajectory, says CBI’s deputy for supervisory affairs.

“We do not believe that the current 18% lending rates are suitable for manufacturers and as such, all our efforts are directed to make sure that the rate will be brought down,” Farshad Heydari was quoted as saying during a televised debate, CBI’s website reported.

The official noted that lending and deposit rates have undergone appropriate cuts.

“With an increased supply of money and the financial markets reaching a balance, we will witness a further decrease of these rates,” he said. “All markets are interconnected and if sufficient attention is not paid to them, the problem might seep to other markets and create heavy turbulence in the economy.”

The Money and Credit Council, which is the highest monetary decision-making body in Iran, voted in late June to lower lending rates by two percentage points, bringing them to 18% from the previous 20%.

Heydari emphasized that implementing directives approved by the MCC and the regulations of the banking system are among the duties of CBI.

“The MCC has decreed that the lending rates would be set at 18% and has communicated this decision to the banking system,” he added. “Therefore, CBI’s inspectors in Tehran and throughout the country maintain a meticulous watch and will take disciplinary measures toward any violations.”

Heydari noted that just a year ago, figures as high as 25-28% came up when talking about lending rate, “but even if 18% rates are not [strictly] upheld at the moment, rates higher than 19% or 20% are not reported”.

“We have warned and issued disciplinary orders for 10 banks in the past few months,” he added.