The Central Bank of Iran has rejected speculation that it has a discord over interest rates on deposits at commercial banks with the ministry of economic affairs and finance, IRNA reported on Saturday.
CBI suggests that all it takes is to closely scrutinize the remarks so far made by Ali Tayebnia, the minister of economy, and compare them to CBI’s course of action in the monetary market to arrive at the same conclusion.
After a recent article titled “Double Standards for Interest Rates: Economy Minister versus CBI” was published in media, rumors spread indicating that regarding deposit interest rates, the policies of the ministry of economy are not in accord with those of CBI.
Currently, economic entities are cooperating harmoniously, the report said, to help devise the government’s economic policies. The case is even more so with the vision of the ministry and CBI.
Earlier, Tayebnia said that the government does not intend to dictate interest rates to the banking system but seeks to maintain a balance between the interest rates and the realities of the society.
Logically, however, appropriate economic policies call for reduction of interest rates, he added.
The same policy has been adopted by CBI, the report said. The CBI’s policies have been set out in accordance with the realities lying within macro economy and it has tried to balance interest rates in accordance with major effective variables in a competitive environment.
After the rise of “destructive” competition in the monetary market, CBI decided in May 2014, to incorporate the banks so that together they could sort out the discrepancies surrounding the monetary market. Thus, the State Banks’ Coordination Council and the Association of Private Banks and Credit Institutions agreed to clarify maximum limits for deposit interest rates. Given the harmful effects of increased rates, CBI warmly welcomed the idea and mandated all banks and credit institutions to adhere to the new rates.
Official interest rates on deposits vary between 10 to 22 percent in commercial banks, with some banks violating the official ceiling in a bid to absorb more money. According to CBI reports, the banks violating the interest rate regulations offer as high as 27 percent rate on long-term investment deposits.
CBI was forced, once again in November 2014, to call a meeting with senior bankers to reiterate the importance of adhering to the maximum interest rate previously set by the regulator. Bankers again seemingly embraced the idea.
According to the report, CBI has taken several factors into account to set a maximum interest rate, including oscillations in the monetary market and the operation of other economic variables.
CBI does not by any means stand for the unchecked and illogical rise or fall in interest rates. The recent agreement, between CBI and the banks, has been made in line with natural economic needs. Thus the CBI’s policies seem to be in total accord with the ministry.
