From 2000 to 2004, the profit rates charged on banking facilitiesstood at 2.2 percent in Iran, which were lowest among the Southwest Asian nations.

A comparison between the bank profit rates in Iran with those offered in other parts of Southwest Asia will reveal that account-holders in regional countries are better off in terms of getting value for their money.
A savings account in a bank or other financial institution is used for depositing funds for a minimum period, say six months, to earn a monetary return. Savings accounts do not offer check-writing privileges, although certain institutions consider savings accounts as their high-profit niche.
All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement. Earnings may be in the form of dividends, as in the case of a share-type savings account or profit, whose rate is determined by the Central Bank. The frequency of the earnings on a deposit may vary greatly and can either be daily or monthly in the case of deposit accounts or quarterly or even annually for other types.
For the same reason, withdrawals from a savings account can usually cost higher than the same financial transaction performed on a demand account. A service charge, a penalty on the earnings or a limit on the number of withdrawals per month also applies.

Projections
According to Fars News Agency, Iran is projected to emerge on top in terms of economy and technology across the region, based on the 2025 Vision verified by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.
The Fourth Five-Year National Development Plan’s (2005-10) Section 4 also emphasizes knowledge-based development of the country’s financial and economic structures.
Under the Fourth Plan, the government should revamp its economic, financial and technology policies to help research institutes meet the country’s educational, social and industrial needs in this increasingly competitive world. It calls for setting up comprehensive programs for scientific development, especially with regard to advanced technologies at the international level, giving priority to national and regional capacities in the areas of IT, space and nuclear sciences.
It is also important to compare bank profits rates in Iran with those offered in other regional countries to see where the country stands and whether it can implement some of the financial policies outlined in the Fourth Plan.

Comparison
During 2000-04, the profit rate offered on savings account in Iran was _2.3 percent. As a result, Iran ranked last among 14 Southwest Asian countries.
In the Iranian year ending March 2005 (the last year of the Third Plan), the profit rate for savings accounts reached _3.1 percent and Iran ranked 10th among 11 countries in the same region. Incidentally, during this period, profit rates in Armenia, Kyrgyzstan, Egypt, Jordan and Iran were all negative.
As per the report, the average profit rates offered in Southwest Asian countries between 2000 and 2004 stood at 2.5 percent, of which 1.2 percent belonged to the final year (2004-05). A cursory look at these figures will reveal that the profit rates offered by the Iranian banks were even lower than the average rates of these particular countries and the difference even rose during 2005.
Likewise, from 2000 to 2004, the profit rates charged on banking facilities (lending rate) stood at 2.2 percent in Iran, which were lowest among the Southwest Asian nations.
During the same period, profit rates offered by most of these countries were well over 5 percent. In 2004 alone, profit rates in Iran stood at 1.9 percent, making it the last among ten nations of this particular region.
The average lending rates in Southwest Asian nations stood at 12.5 percent in 2000 to 2004, reaching 9.7 percent in the final year. In comparison, lending rates in Iran were even lower than the average rates of these countries. Hence, profit rates paid on savings accounts in Iran are not up to the mark in comparison to other Southwest Asian states.

Other Considerations
Many of those who apply for banking loans or other financial facilities in Iran are charged less than their counterparts in Southwest Asia. In other words, savings accounts in Iran received negative profit rates and banking facilities were extended at low profit rates with a very low investment risk.
This gives rise to corruption as well as excessive investments derived from banking facilities with little or no efficiency. In circumstances like this, people tend to float investment schemes with higher returns when applying for bank loans. This engenders rent-seeking practices, poor innovativeness among producers and low efficiency in economic projects.
Those in favor of reducing bank profit rates maintain that by cutting down the costs of lending, productivity as well as investment returns will rise, giving an impetus to investment schemes and productive activities.
Such an objective cannot be materialized without removing obstacles to industrial production activities. Some of these obstacles include monopolized markets, restrictive regulations governing the goods and services sectors, as well as labor and investment markets, which curb institutional flexibility and underutilize resources.
Bank profit rates are a vital monetary policy tool that helps control variables like inflation and unemployment. Hence, these rates are the main determinant of investments on a macroeconomic scale. If profit rates increase across the board, investments will decline, causing a fall in national income. On the other hand, if profit rates are high, the economy would prosper, encouraging people to borrow money at even higher lending rates.
Since that is the case, officials responsible for making macroeconomic decisions should use bank profit rates as a key monetary tool for boosting production and economic growth.

Article 31 of the constitution stipulates that every Iranian individual and family is entitled to a house commensurate with one’s needs and the government must prepare the ground for implementing this article. However, high rents and ever-increasing housing prices indicate that the government is struggling to tackle many impediments in fulfilling this obligation.
According to Moj News Agency, housing devours a disproportionate amount of income of those living in large cities.
Population growth and influx of people from rural areas to metropolises have constantly increased demand for housing units and spiked prices. But the supply-demand imbalance is not the sole reason behind the skyrocketing prices and vacant housing units. The improper distribution of residential units and lack of purchasing power are leading to the situation where a large number of houses remain vacant.
Housing prices have jumped by 30-40 percent this year because of increasing demand for new housing units and fewer constructions linked to costly construction materials.
The wide gap between supply and demand has also led to speculations and soaring prices in the housing market. In order to make prices real and facilitate housing ownership, the government should take measures to prevent speculators and profiteers from manipulating the sector.
In order to achieve this, the following steps should be taken:
1. The government should offer non-tradable lands at reasonable prices to cooperatives that have the potential of constructing high-rise buildings. Supervision should ensure that housing price declines. And banks, involved in mass housing construction projects, should extend loans at low lending rates so that the price of houses declines.
2. Heavy taxes should be levied on the sale of private land to help regulate the price of land and generate revenues that can be spent on the housing price control policies.
3. The government should set a deadline for builders to sell or rent their houses and impose effective fines for those failing to meet the deadline.
The government’s direct share in the housing sector is insignificant, but its policies play a major role in exacerbating the sector’s current crisis.
But housing officials deny this and link high prices in the housing market to external factors such as poor investment, inflation and market fluctuations.