Economic experts have raised doubts about the prospect of privatizing Iranian banks as the deepening financial crisis spreads globally.

According to a report in the Persian daily Sarmayeh, economists have suggested that because the global financial crisis is pushing private banks into the hands of governments around the world, time is not ripe for Iran to privatize its state-owned banks.

"The privatization of banks, in the current situation during which other countries are debating about nationalization, is an unacceptable decision," Hoshang Khastouei, a banking expert told the daily.

In September, the long-awaited Iranian privatization law came into force in a bid to invigorate the private sector. Iranian economic life has been dominated by a centralized economy and major government corporations for nearly three decades.

Currently, industries such as mining, rail transport, aviation, insurance and banking are being privatized in Iran in compliance with Article 44 of the Iranian Constitution.

Khastouei also questioned a decree by the Central Bank of Iran (CBI) that orders private banks to cut the interest rate in coordination with state-owned banks.

On Sunday, the Tehran Stock Exchange (TSE) suffered an unprecedented plunge, falling to its lowest level in five years.

The TSE index (Tepix) fell to 8,974 upon opening, dropping below the symbolic 9,000 points for the first time since 2003.

The government directly holds 35 percent of shares listed on the TSE, while securing another 40 percent through pension funds and investment companies. Foreign investment accounts for only 2 percent of the Iranian stock market.

"The current atmosphere that is dominating the country's economy is not a good condition, and banks - based on their amount of deposits - are not in a suitable situation," said Mosafa Vallahi, an expert in investment markets.

He noted that shares in private banks had plunged in recent weeks and insisted that the privatization of state-owned banks in the current financial climate is "uncalled for".

Iran's Privatization Organization (IPO) says it will sell five percent of state-owned banks in the stock market by December 21.

DB/CW/AA