The Central Securities Depository of Iran (CSDI) says it has prepared a special platform to ease the way for shareholders to put up securities as collateral for bank loans, however, "It is for the banks to decide whether or not to comply."
The “CSDI’s task is [only] to create the platform, not be abreast of or get involved in banks' policies on this matter," Mohammad Baghestani, the CSDI chief, was quoted as saying by the CSDI website.
So far three banks have accepted the “smart securities' collateralization”, namely Bank Melli, Mehr Iran Qarz al-Hassanah Bank and Resalat Qarz al-Hassanah Bank.
"Other banks are working to implement the system including Bank Mellat, Dey Bank and Tejarat Bank," Baghestani said.
Dubbed ‘Setareh’, the platform enables investors to meet their liquidity needs without having to sell stocks or other assets. It was unveiled in July by the Securities and Exchange Organization.
The platform offers investors the option to put up securities as collateral for short-term credit. The securities can be released after debts are paid.
It the first phase, borrowers can put shares as collateral but the platform handles collateralization process for other assets, namely gold-based certificate of deposits, bonds and units of exchange-traded funds.
Baghestani said that the infrastructure for the platform was prepared in 2020 for owners of the so-called Justice Shares.
“Until now, about 350,000 holders of Justice Shares have borrowed 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.
Putting up shares as collateral is not new in Iran, but was only for institutional investors and for big loans.
The newly expanded platform is backed by law approved in March to facilitate microloans for the general public. The Majlis has obliged banks to diversify asset classes used for collateral.
In collaboration with Economy Ministry, the Central Bank of Iran should provide online access to put up shares, securities and units of exchange-traded funds as collateral.
