Two private banks, namely, Parsian and
Saman banks have announced since July that they have reduced profit rate of
their facilities to 17 percent which has been determined by the government.
Managing director of Saman Bank noted that a 17 percent profit rate for bank
facilities has been in effect for all private banks since the beginning of the
Iranian month of Tir (June 22- July 23).
Chairman of the central branch of
Parsian Bank noted that the 17 percent profit rate has been made effective for
exchange contracts since a month ago. He added that most referrals to bank
have been in relation to housing facilities.
"All branches of Parsian Bank are
disbursing facilities at a profit rate of 17 percent. This is also true about
other exchange contracts such as sales on installment," he noted.
Nozari further stated that profit rate
for other facilities, which are disbursed within frame of partnership
contracts, will depend on agreements between the bank and its customers.
Also, managing director of Saman Bank
told Fars news agency that ratification of Money and Credit Council has been
notified to all private banks in the middle of the Iranian month of Khordad
(May-June) and has been enforced since June 22.
Rajaei Salmasi added that Saman Bank is
currently paying a maximum of 20 million tomans for purchasing housing units
at a profit rate of 17 percent.
"The bank also pays facilities for
domestic repair of houses up to a ceiling of 10 million tomans at the profit
rate approved by Money and Credit Council," he noted,
The official stated that all files that
have been registered since June 22 for disbursing facilities will be treated
according to a 17 percent profit rate.
|
If we believe that high profit
rates on banking facilities is harmful to domestic economy, we must take
steps to reduce those rates. |
Asked about recent statements by
minister of economic affairs and finance that private banks will continue to
be profit-making even with a 17 percent profit rate on facilities, managing
director of Saman Bank noted that a 14 percent profit rate for state-run banks
has been enforced since the beginning of the year and private banks have made
the 17 percent profit rate effective since June 22.
"While financial statements of banks
have not been prepared yet, how is he presenting such forecasts? Undoubtedly,
all banks will be making loss at this rate of profit. When state-run banks
accept people’s deposits with a profit rate of 16 percent, save 20 percent of
it as legal deposit, and disburse the remaining 80 percent as facilities with
a profit rate of 14 percent, they will be making a 3 percent loss," he said.
The managing director of Saman Bank
added, "He laughs best who laughs last. For a correct assessment of
performance of banks, we must wait until statistics related to the end of the
year are released."
When a reporter asked if private banks
will be making loss, what justification is there for continuation of their
activities, Salmasi answered, "Private banks compensate their losses through
rendering other services including foreign exchange services and issuance of
letters of guarantee."
"However, we must not have to cover
losses resulting from a banking service through other sources of revenue.
Every service which is provided by a bank should earn its respective profit,"
he concluded.
Morteza Tamaddon added, "If we believe
that high profit rates on banking facilities is harmful to domestic economy,
we must take steps to reduce those rates. However, some may opine that banks
will be hit by such reforms because domestic banks have gotten used to taking
high profit and interest rates and it is hard for them to give up this
practice."
Talking to the student news agency,
ISNA, when asked why several months after approval of the government’s
ratification on profit rates, state-run and private banks are not willing to
enforce it, he said, "There are no behind-the-scenes discussions about the
ratification. However, there are two problems with regard to enforcement of
the ratification by private banks. The first problem is the issue of executive
guarantees because when Money and Credit Council has approved the
ratification, what guarantees are there to ensure compliance of private or
state-run banks."
Representative of Shahr-e Kord at the
Islamic Consultative Assembly (Majlis) further asked, "Has Money and Credit
Council considered punishments for non-compliance? If the private sector
proves determined not to comply with it, what would happen? Therefore, it
seems that the ratification has stipulated no obligation in this regard."
Member of Majlis Plan and Budget
Commission also stated that the ratification should be implemented with due
care to prevent any damage to domestic banking system.
"The private sector should have enough
room to regulate its market through competition and instead of treating banks
in a forceful manner, they should be guided and the government should explain
its reasons for reducing profit rate of bank facilities," he said.
Tamaddon noted that the private sector
is currently mature and is ready to help the government in all fields.
"Therefore, we must allow the private
sector and banks to make a decision on reducing profit rates on the basis of
necessities, competition and share of the market. Naturally, when profit rate
of bank facilities is reduced, profit rate of deposits will be also lowered.
However, a low profit rate for bank facilities will be potentially beneficial
to the whole society. The sole concern is about implementation of this
ratification because there will be resistance to changing the previous method.
However, we must behave logically toward banks to get them cooperate
voluntarily with this process," he said.
