January 17, 2025
The Majlis Research Center is accusing banks of ducking their legal responsibility to extend loans to newlyweds and new parents. The charge is not surprising; the banks have complained about the legal requirement that they make such loans because the newlyweds and new parents need pay no interest on the loans, leaving the banks stuck with the bill.
A study published on the website of the Majlis think tank showed only 46 percent of marriage loan applicants managed to get the money in the first eight months of the last Persian year. The figure was 66 percent during the same period the previous year. Marriage loans are interestfree, repayable in seven years.
Couples can apply up to two years after their marriage. The government last year doubled the amount of money that couples could borrow, sticking the banks with a much greater burden than ever before. Banks lent 738 trillion rials ($2.71 billion) in marriage loans to 533,377 applicants last year although 1,115,000 applied for the marriage loans.
As for the loans for new parents, banks had an “unacceptable” performance as 60 percent of the applicants were left behind. According to the Central Bank public relations department, banks processed 523,000 applications for childbirth loans in the eight months, while the total number of applicants exceeded 1,280,000.
Banks were ordered to lend to young parents to encourage childbirth. First-time parents are eligible for 200 million rials (then worth $400) for the birth of the first child, 400 million rials for the second child, 600 million rials for the third, 800 million rials for the fourth and 1 billion rials ($2,000) for fifth child and more.
The study said lack of resources, galloping inflation plus stringent Central Bank rules related to the banks’ financial statements had hindered childbirth loans. It also said banks had breached government rules on collateral by demanding loan applicants provide more than one guarantor.
Banks are obliged to lend in the form of Qarz-ol-Hassanah schemes (interest-free microcredit), despite mounting concern about the detrimental impact of such a heavy burden on the already troubled banking industry. Many economists and senior bankers have censured the regime for imposing such obligations on banks to keep lending beyond their capacity.