Banks and credit institutions gave 1,390 trillion rials ($3.42 billion) in loans to encourage youth marriage and childbirth since the beginning of the calendar year last March
The Central Bank of Iran said the money was given to 1.57 million hard up applicants in nine months.
“Banks processed 643,330 loan applications worth 259 trillion rials [$637 million] to promote childbirth,” the CBI website showed.
Lenders were obliged in April last year to give loans to new parents to encourage childbirth. The money is given to low-income households who had a child in the previous fiscal year (March 2021-22) and after.
First-time parents are granted 200 million rials for the birth to their first child, 400 million rials for the second child, 600 million rials for the third, 800 million rials for the fourth child and 1 billion rials for five children and more.
Almost 1,027 trillion rials ($2.52 billion) in marriage loans went to 743,000 applicants -- up 51% on the same period last year.
Marriage loans are interest-free repayable in seven years. Couples can apply for loans up to two years after the pronouncement of their marriage.
The government doubled marriage loans for this year. Per the 2022-23 budget, each partner who ties the knot is eligible for 1.2-billion-rials.
To help encourage early marriage, lenders are required to grant 1.5 billion rials per partner if the bride is below 23 years and the groom under 25.
Increase in lending is to help population growth. Many sociologists have warned that the population is ageing and the youth are mostly disinclined to tie the knot, start a family or have children due to the lack of jobs, worsening economic conditions, galloping inflation, prohibitive housing costs and an uncertain future.
Valid Concerns
Lenders are obliged to lend in the form of as Qarzol-Hassanah schemes (interest-free microcredit) amid valid concerns about the detrimental impact of mandatory lending on the already troubled banking industry.
According to the CBI, lenders also gave security deposit loans worth 105 trillion rials ($258 million) in the same period to 183,000 people wanting to rent a home.
Security deposit loans were announced by the government in 2020 after the Covid-19 struck. The move was to support those unable to rent a home due to the historic increase in rents and home prices that has continued unabated, making home ownership for many a fantasy.
Lenders should provide eligible applicants loans for renting a home up to 1 billion rials in Tehran City, 700 million rials in other big cities and 400 million rials in other urban areas in the country.
Senior bank and economic authorities have routinely censured the policy and decision making bodies for imposing the extra burden and hefty obligations on banks to keep lending beyond their ability and capacity.
The government initially had projected mandatory lending by banks at 6,000 trillion rials ($19.3b) in the current fiscal year. But MPs more than doubled that to 13,000 trillion rials ($42b) apparently unconcerned about the weak performance of banks most of which are already struggling with troubled balance sheets and soured loans.
The subsidized loan schemes demanded from banks has undermined the already tight situation of lenders, Vahid Shaqaqi Shahri, a renowned economist and university lecturer said recently.
Shahri recalled that over the past several years governments announced mandatory lending that demanded huge financial resources that hardly existed.
“However, since its own resources were few and far between, the government turned to public and private banks and in the process transformed them into its piggy bank," he said.
