Reported by HPMM Group according to FINANCIAL TRIBUNE ;  The Central Bank of Iran has notified rules concerning interest paid to state bodies on their bank deposits.

According to the IBENA report on Sunday, most state entities cannot receive any interest on their bank accounts, including current account, short-term and long-term accounts held by government-run or private banks.

The measure, however, clarifies that banks, state-owned Iran Insurance Company and Securities and Exchange Organization, as well as funds, universities, research centers and institutions under the mandate of the Leader and other entities specified by the rules have been exempted.

The ruling prohibiting state bodies from interest payments came after the administration of President Hassan Rouhani decided to transfer the accounts of all state bodies from agent banks to the Central Bank of Iran.

The decision was announced on August 2016, in line with its policies to promote transparency and avoid dodgy practices related to the expenditure of public-sector organizations.

The scattered government accounts across different lenders in the past made oversight difficult, as a number of banks labeled them as private resources and used them for loan allocation. This led to an unhealthy relationship between account holders and the banks.

However, the banking regulator is legally obliged to provide banking services to all public sector organizations and all state bodies are obliged to deposit their money at CBI.

The provision had originally been included in the Fifth Five-Year Development Plan (2011-16) but due to the lack of proper infrastructure, CBI had been forced to move the government’s accounts to a number of agent banks, both public and private.

CBI’s latest report on the transfer of state accounts has shown that 84% of the designated entities have participated in the scheme that heralds more transparency and discipline in public finances.

Its notification on Sunday also obligates banks and credit institutions to waive late payment fines of their customers if they settle them by Sept. 22.

According to CBI’s website on Wednesday, of the 1,061 entities included in the scheme, 888 of them have opened an account with the banking regulator.