Multilateral Push to Reduce Bank Rates

Financial Tribune- A fter a joint meeting held by the members of Majlis Economic Commission, CEOs of state-owned banks and officials of Economy Ministry to discuss different aspects of interest rate cuts, the head of the commission announced the establishment of a committee to further pursue the matter.

"A comprehensive report on the banking system was presented in the meeting and we decided to form a committee comprising representatives of the Central Bank of Iran, Majlis Economic Commission, Ministry of Economy, Associations of Private and State-Owned Banks, and Management and Planning Organization to find solutions to cut interest rates on banks and credit institutions' deposits and present it in the next meeting," Mohammad Reza Pour-Ebrahimi was also quoted as saying by ICANA.

After a long debate, the negotiations did not yield any results and hence the proposal to form the committee.

The report also mentioned that members of the aforementioned committee will include CBI officials, Mohammad Reza Hossein-Zadeh, Bank Melli's CEO who is also the head of state-run banks' association, the head of Private Banks' Association, Kourosh Parvizian, and Mohammad Hossein Hossein-Zadeh, the head of the commission's Monetary and Banking Committee.

The late Monday meeting was chaired by Pour-Ebrahimi, according to whom top issues of the banking system, especially cutting bank deposit rates, were discussed.

"High bank interest rates have created a number of problems for banks' operations," Pour-Ebrahimi added.

The head of the commission noted that reducing bank interest rates in line with the inflation rate could have positive results for the country's economy.

"Reasons behind the jump in bank interest rates were assessed during the meeting and banks presented their reports regarding the issue," he said.

Representatives of CBI, Economy Ministry and associations of private and state-owned banks also reported on their efforts in determining interest rates.

"We are trying to devise a schedule to bring down the interest rate on deposits since it has also affected loan rates, which have harmful effects on the economy and even challenge banks themselves," he said.

Pour-Ebrahimi emphasized that if the illegal money market is pushed aside, it would be impossible for interest rates to go up unchecked.