Economy, Business And Markets

CBI Intensifying Oversight

CBI Intensifying OversightCBI Intensifying Oversight

The Central Bank of Iran (CBI) has urged big banks to help it intensify supervision over the enforcement of its recent directive on interest rates.

“The CBI has deployed more inspectors to commercial banks this time and is determined to control the rates,” Mohamamd Reza Saroukhani, managing director of Bank Mellat, told IRNA on Friday.

The CBI has set a ceiling of 22 percent for the interest rates offered by banks but some of the banks are offering higher rates in an attempt to absorb more deposits.

Saroukhani said that the regulator expects all commercial banks, especially those having violated the rules so far, to comply with the announced rates.

“The interest rate of 22 percent was initially reviewed and decided by officials from both the CBI and commercial banks,” he said.

Certain banks have violated the regulator’s decision that led to confusion in the money market and influenced the banks’ resources, he noted.

The violations alarmed the CBI and the big banks, which argue that high interest rates could raise the cost of money, influence the rate of loans offered to industries, and at the end affect the finished costs of manufactured products, according to the official.

The agreement to keep the rates unchanged as of December 22 was reached in a meeting between central bank officials and commercial banks’ CEOs.

Under the law, deposit rates are limited between 10 and 22 percent.

Last week, Ali Tayebnia announced that the government had no intention to intervene and reduce interest until the yearend.  

Referring to the fall of the inflation rate from 40 percent in October 2014 to 17 percent now, the minister said that interest rates would be reduced soon. However, he said, it doesn’t mean that the government aims to intervene in the market and dictate the interest rates. “The government will adopt appropriate policies so that the rates would naturally decreas in line with the market.”