The Securities and Exchange Organization (SEO) held a ceremony Wednesday to unveil an electronic platform that eases the collateral process for investors seeking loans.
The ceremony was attended by the economy minster, the attorney general and CEOs of state-owned banks, the SEO News Agency reported.
Dubbed ‘Setareh’, the platform enables investors to meet their liquidity needs without having to sell stocks or other assets.
Majid Eshqi, the SEO chief said the platform is designed to address the pressing financial needs of retail investors.
“The platform offers investors the possibility to put up their securities as collateral for short-term credit. The securities will be released after debts are paid,” Eshqi said.
Putting up shares as collateral for loans existed in the past, but it was only for institutional investors and for big loans, according to Eshqi.
“Microloans are now accessible for retail investors electronically.”
The platform will also have other functions and can be used by the judiciary to ease the process of securing bail for defendants and release culprits charged under bailable offences.
It the first phase, borrowers can put shares as collateral but the platform will handle collateralization process for other assets, namely gold-based certificate of deposits, bonds and units of exchange-traded funds.
The Economy Minister Ehsan Khandouzi welcomed the move as a major development in the economy and hoped it would benefit the people.
He said for now three banks are linked to the platform, namely Bank Melli Iran and two Qarzol-Hassanah (interest-free) lenders, Qarz Al-Hassanah Mehr Iran Bank and Gharzolhasanah Resalat Bank.
“Other banks will join in the future and the Economy Ministry will step up efforts to help expand the platform.”
In the same vein, Mohammad Baqestani, managing director of the Central Securities Depository of Iran said that the infrastructure for the platform was prepared in 2020 for owners of the so-called Justice Shares.
“Until now, about 300,000 holders of Justice Shares have been able to borrow by using shares as collateral,” he said, noting that the upgraded platform is not limited to such shares.
Justice Shares are shares of big government-owned companies given to the six lowest income deciles almost 15 years ago. The shares were not tradable until April 2020.
Justice Share portfolio includes 49 state-owned companies in the auto, metal, mining, and agriculture, petrochemical and banking sectors.
Legislative Backing
The expanded platform is backed by law approved in March to facilitate microloans for the people. The Majlis has obliged banks to diversify asset classes used for collateral.
Accordingly, the CBI in collaboration with Economy Ministry should provide online access to put up shares, securities and units of exchange-traded funds as collateral for loans.
In a similar move in late 2021, the Economy Ministry announced rules based on which pensioners and salaried workers can borrow up to 1 billion rials from banks without the need for collateral.
Instead of collateral, borrowers should present their salary certificate for loans of up to 500,000 million rials. For loans above this amount they have to submit a check or promissory note.
Only salaried employees with good credit rating can use the collateral-free financial facilities.
Despite the ministry’s emphasis on credibility assessment for such loans, there is no defined criteria for appraising borrowers.
