Banking interest rate: a mystery to end?

Starting this week, the Central Banks instructions for reducing bank interest rates are being carried out which aim to reduce long-term saving account interest to 15% and short-term interest rates to 10%. Although this directive was issued more than a year ago, almost all banks offered higher interest rates in order to attract investors.

Usually by depositing higher sums, banks offered higher interest rates. To combat this, the Central Bank has issued a statement promising severe punishments for banks that offer higher interest rates.

However, on the first day of this plan, i.e. on Saturday, September 2, some banks offered customers the option to open accounts with 23% interest rates, reported ISNA (Iranian Student News Agency). The Central Bank has assigned a special phone number and asked people to report banks who are breaking regulation. ISNA reports that some banks are asking high capital customers to wait for a while; and after a few days, new options will become available to customers with large saving accounts. The Central Bank has rejected this plan and banned any plan which circumvents the rates.

Due to the reduction of the inflation rate to 8%, the Government and the Central Bank are seeking to guide the capital saved in banks into the market. High interest rates paid by banks prevented the reduction of interest rates demanded for loans which had led to increased costs for manufacturers. This in turn raised the price of domestically produced goods and made them uncompetitive. Based on the new instructions, the interest rate for loans offered by banks is set at 18 percent.