Iran sets bank deposits interest rate at 22%

Business Materials 20 December 2014 17:30 (UTC +04:00)

Baku, Azerbaijan, Dec. 20

By Umid Niayesh - Trend:

Iranian administration set the annual interest rate for bank deposits at 22 percent, the country's Central Bank said Dec. 20.

The decision which was made during a meeting of the Central Bank with banks directors will come on stream from Dec. 23.

The maximum interest rate for deposits of 90 days or less is set at 10 percent, for six months to three months at 14 percent, 6-9 months at 18 percent and 9-12 months at 20 percent respectively.

As of 2010, the interest rate charged between banks is set by the government of Iran.

The Central Bank also announced that serious measures, including fines and canceling the license for certain banking activities will be taken against the banks which raise the interest rate above the approved figures.

Earlier, Iranian media outlets reported that five state-run and private banks have increased interest rates to 26 percent, while the Central Bank has not issued any order for increasing the interest rates since February 2012.

Negative real bank interest rates following to a rise in the inflation rate led to a fiscal crush in the country's fiscal system, the Central Bank of Iran said last December.

The real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator.

In August 2013, the Central Bank Governor Valiollah Seif said that the bank's interest rate should be set proportional to the inflation rate.

Seif added that interest rates should be revised, so that it would be less than the inflation rate.


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