Amman, 8 Sep. (Petra)—The Association of Banks in Jordan (ABJ) said that what determines interest rates on loans and deposits is the inter-bank competition mechanisms.

This would leave customers with the free choice of the bank that meets their needs, it added.

In a statement published today, the ABJ said that raising, or lowering interest rates on loans granted to individuals is done according to a certain mechanism that perfectly reflects the CBJ instructions on the fair and transparent dealing with customers, as banks comply with all CBJ instructions. The mechanism, it added, is highlighted in the agreement that the customer signs with the bank.

Banks are aware of opinions regarding interest rates, the statement said. Some of these opinions are scientific and based on economic foundations; others lack objectivity and seek to distort realities, claiming that some banks were not responsive to CBJ decision to lower interest rates by quarter of a percentage point, and, regretfully, these false claims are circulated in social media.

Amendment of interest rates, whether by raising or lowering, should be subject to contractual obligations made months earlier by borrowers, it said.

The ABJ underlined in this context that banks cannot automatically lower or raise interest rates on borrowers, as changing interest rates which could be done for specific times a year according to the signed contract that is obligatory to the bank also, as instructions and laws in force stipulate.

The stamen drew attention to the fact that there is a special unit at the CBJ which receives customers’ complaints. The unit follows up complaints with banks in case there is any dispute or unresolved issue between the customer and his/her bank.

The statement went on to say that banks regard interest rates as based on free competition that takes into consideration the specific policy of each bank, according to the risks and credit concentration of each customer. Therefore, their handling of this issue is done as per the mechanisms set in the CBJ instructions and the competition rules that govern the mechanism of the market, which comprises 24 banks. The customer could certainly benefit of this competition to get the best rates.

As regards the term of “VIP customers,” the ABJ said it is for corporate customers, as the Prime Rate Lending concerns corporate customers of high financial solvency, and not individuals. CBJ instructions require that any change in interest rates should be public, therefore banks publish this change.

Individuals’ loans with changing interest rates, the statement clarified, are linked to another indicator of interest rate indicators, one that reflects the interest rate levels in the market. These levels change according to the changes in interest rates on monetary policy instruments.