Banks and credit institutions gave 160 trillion rials ($516 million) in collateral-free loans after the government announced a new lending program in January.
According to a press release of the Economy Ministry, the loans were given to 475,448 applicants from mid-January to July 22, marking the end of the last calendar month.
Collateral-free loan refers to the government’s scheme obliging banks to lend to salaried workers and retirees, under pressure due to the high and rising cost of living, without demanding collateral or other guarantees.
As per Economy Ministry rules, pensioners and salaried employees can borrow up to 1 billion rials without putting up securities.
Instead of collateral, workers should present their salary certificate for loans up to 500 million rials. For loans above this amount they have to submit a check or promissory note.
According to the ministry’s data, Bank Sepah was the main provider of such loans. It gave 53.8 trillion rials ($173 million) to an estimated 196,000 applicants, accounting for 33.7% of the total lending.
It was followed by Tejarat Bank and Qarz Al-Hasanah Mehr Iran Bank, accounting for 16.6% and 14.3%, respectively, of the total collateral-free loans.
The Economy Ministry has said such facilities are available only to the salaried employees with good credit rating.
Despite the ministry’s emphasis on credibility assessment before granting loans, there is no clear-cut criteria for such appraisal.
Earlier the Central Bank of Iran said the basis for credibility assessment could vary and include factors like the borrower’s financial track record, including past borrowing, borrowers’ check transaction performance and even their performance in paying traffic fines and utility bills.
Under the credibility assessment announced earlier by the CBI, banks will limit access of deadbeat customers even if they put up proper collateral but failed to repay debts on time in the past.
The regulator has devised a platform for online inquiries on credibility status at mycredit.ir website. The platform keeps data on 44 million IDs and is able to provide information on 34 million bank customers.
