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Expensive deposits leave Iranian banks stuck with toxic assets

A review of interest rates for bank deposits in Iran shows widespread violations of the interest rate ceiling ordered by the Central Bank of Iran.
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Iranian media reports show that many banks and credit institutions are violating a decision made last June by the Money and Credit Council, the highest policymaking body of the Central Bank of Iran, in regard to the interest rate for deposits. The council capped the rate at 15% and threatened banks with disciplinary actions should they ignore the decision. Yet 90% of banks have failed to comply with the mandate since then, leading economic newspaper Donya-e Eqtesad reported June 8.

An unidentified private bank is offering 23% interest on one-year savings accounts, Tasnim news agency reported June 10. Many other private banks have adopted similar policies. Even state-run banks offer higher than the authorized interest on savings accounts, the report noted, arguing that the state banks have been left with no other options as they want to survive in the ongoing race to attract liquidity.

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