Interest Rate Violations Under Scrutiny

The Central Bank of Iran will firmly confront unruly lenders, the head of CBI’s Department for Supervision said. Stressing the necessity of monitoring banks violating CBI’s policy regarding interest rates, Abbas Kamarei also told IBENA that CBI should find out why this violation occurred, especially after the government issued Islamic Treasury Bonds with a relatively high 23% interest rate.

Interest rates on deposits have been set at 15% by the Money and Credit Council, but some banks tend to offer higher rates to attract more capital. Kamarei noted that the yield on ITBs creates a problem for the banking system. The government had issued 420 trillion rials ($11.17 billion) worth of bonds by the end of February to make up for its budget deficit.

Shapour Mohammadi, the head of Securities and Exchange Organization, had said that the bonds would not be offered in the stock market. The government pays up to 25% on its one-year ITBs, while inflation stands at about 9.5%.