Interest on sight deposits will be calculated via a new method, a newly issued directive by the Central Bank of Iran states.
According to the directive, interest on sight deposits will be based on the bearers minimum daily account balance during the month and will be calculated at the end of the month. The rate for such deposits is 10 percent annually.
Banks and credit institutions have to tailor their existing products so that their effective interest rate remains within the central bank’s set rate. Any new financial product has to be vetted by the CBI.
Previously it was announced that sight deposits would get interest be derived from minimum account balance during the month, with interest being paid at the end of the month.
Central bank officials sat with bank CEO’s on Dec. 21 in a bid to get them on board on lowering interest rates. This was the CBI’s second attempt to get bank’s inline on the decision.
The central bank wants to lower interest rates in line with the declining inflation, which is expected to fall below 20 percent by the year’s end from last fiscal year’s 34.7 percent.
The annual rate for investment deposits, no amount from which is withdrawn for at least one year, was set at maximum 22 percent on the Dec. 21 meeting. If inflation falls below 20 percent, as is the administration’s target, that would mean a two percent real interest on the deposits. Currently banks do not offer long term deposit contracts due to the country’s uncertain economic outlook.
