Iran's central bank raises banks' legal reserve ratio another 0.75 points, taking total hike to 1.5 points

Iran's central bank, according to Mehr News, raised the legal reserve ratio for all banks and credit institutions by another 0.75 percentage points in the second phase of implementing circular No. 21563/05 dated 13 Ordibehesht 1405 (May 3, 2026), based on clause one of the resolutions from the 61st meeting of the Monetary and Forex Policy Council. The central bank had already raised the ratio by 0.75 percentage points in the circular's first phase; with the second phase, the cumulative increase since the circular took effect has reached 1.5 percentage points.

The legal reserve is the portion of bank resources that must be held at the central bank, which banks cannot directly use for lending; raising the ratio limits banks' lending capacity and the pace of liquidity growth. Banking expert Hojjatollah Farzani told Mehr that reducing banks' loanable resources can have an effect on liquidity larger than the initial blocked funds, because it also slows the repeated circulation of money through the economy.