Central bank of Iran targets for next four years outlined
The agenda of the central bank during the next four years includes moving toward stable production and job creation, directing banking assets toward productive economic activities, maintaining a single-digit inflation rate and developing correspondent. Other major items on CBI’s agenda include continuing support for small- and medium-sized enterprises and reforming business models of banks.
The Central Bank of Iran will focus on managing banking interest rates and preventing a price war among other things for the four-year tenure of the next administration, the head of which will be introduced after the May 19 presidential election, the director of Monetary and Banking Research Institute said.
“The most important agendas of the central bank during the next four years include moving toward stable production and job creation, directing banking assets toward productive economic activities, maintaining a single-digit inflation rate and developing correspondent relations with credible foreign banks,” Ali Divandari was also quoted as saying by Banker.ir.
Bank interest rates are currently set at 15% following the decision made last June by private banks and the Monetary and Credit Council.
As announced last week by the director of the Association of Private Banks and Credit Institutions, Kourosh Parvizian, a further decrease in interest and deposit rates will be discussed when the banks convene their next joint meeting that could come as soon as next month.
Divandari noted that other major items on CBI’s agenda include continuing support for small- and medium-sized enterprises, reforming business models of banks, strengthening international banking collaborations, reducing the government’s debts to the banking system, boosting the interbank market and upgrading oversight infrastructures in the banking system.
“Banks help bankroll 91% of Iranian businesses while the capital market is responsible for the remaining 9%. This puts heavy pressure on the banking system while in most countries, capital and debt markets play an active role in financing,” he said, encouraging major companies to approach the debt market and issue bonds.
According to Divandari, CBI and banks have made considerable headway in promoting electronic banking in the past few years, which has significantly reduced the share of banknotes in daily transactions.
“This will play a part in reducing the operational costs of the banks,” he said, noting that the banking system is receiving miniscule fees while banking fees are a major source of income on the international scene.
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