Economy, Business And Markets

Banks Warned Against Offering Higher Rates

Banks Warned Against Offering Higher Rates
Banks Warned Against Offering Higher Rates

Should banks that offer interest rates higher than those officially set by the regulator refrain from heeding warnings by the Central Bank of Iran, they should await serious disciplinary action, says a supervisory official.

“A number of banks offer customers different interest rates. If this trend continues their case will be sent to the disciplinary division of the bank,” the CBI’s Abbas Kamarei said in a talk with Fars News Agency.

Asked about the extent of the central bank’s awareness and knowledge regarding the illegal increase in deposit and lending rates, the director of CBI’s department for supervising banks and credit institutions said the bank is regularly monitoring the implementation process of the rates.

Recalling that the cut in deposit rates was originally proposed by the banks themselves and the CBI only approved it, he said due to preponderance of bank branches, “a number of banks might not adhere to officially approved interest rates. But the CBI is trying to supervise the performance of all banks.”

In a move that was welcomed by public sector banks, CEOs of private banks and credit institutions agreed to offer a maximum 15% interest on one-year deposits, down from the previous 18% in June.

The official said considering the fact that there are 23,000 bank branches across the country and there too many players in the money market, it is “natural” that some banks do not stick to the lower rates.

“We do not claim that 100% of the banks stick to the interest rates. But we can say that the CBI strives for maximum supervision over the lenders.”

Noting that the level of implementation of interest rates in the current period should be compared with previous periods and then gauged, Kamarei said such an assessment would show that most banks adhere to official interest rates more than before and “the CBI has been making progress in this area.”

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