Qarz Al-Hasanah Mehr Iran Bank signed an agreement with the Vice Presidency for Science and Technology Affairs on Wednesday to give microloans to 1,000 plus startups and tech companies.
The agreement was signed in a ceremony attended by CBI Governor Ali Salehabadi, Economy Minister Ehsan Khandouzi and the Vice President for Science and Technology Rouhollah Dehqani Firouzabadi.
"I commend the banking industry for supporting knowledge-based and tech companies…The central bank supports the work of Qarz al-Hasanah banks and allocation of microcredit,” Salehabadi said at the ceremony, the CBI website reported.
"Loans to knowledge-based companies up until November 22 reached 900 trillion rials ($2.54 billion), -- up almost 123% from the same period last year," he said.
The CBI has pledged to increase funding for the knowledge-based enterprises and said new policies will be announced to help find and facilitate collateral such firms need to borrow.
According to data published by the Vice Presidential Office for Science and Technology released in mid-2021, an estimated 6,0000 plus knowledge-based companies are active nationwide.
A knowledge-based economy is a system of consumption and production based on intellectual capital, in which a significant part of the company’s value may consist of intangible assets, mainly the value of its workers’ knowledge (intellectual capital).
The scope of a knowledge-based economy is not limited to the tech industry. It can also be used in other sectors like IT, nanotechnology and biotechnology and other high tech firms.
Iran’s knowledge economy largely depends on the banking industry for funds, but there are plans to help them access money via the stock market.
Interest-Free Banking
The CBI chief stressed that Qarz al-Hasanah banks (offering microfinancing) and other microcredit institutions can and should play a bigger role in funding knowledge-based companies and startups.
"Qarz al-Hasanah banks apparently outshine other lenders when it comes as seen in the financial statements. Their debts are near zero and in terms of bank health indices and balance sheets they have a more promising situation than other lenders."
He referred to the Credit Commission of the Central Bank of Iran's March decision to raise the cap on interest-free loans fourfold.
"The ceiling for an emergency microcredit has been increased to 2 billion rials ($7,692), from 500 million rials…Because the ratio of non-performing loans in Qarz al-Hasanah banks is extremely low and the risk of default less so."
The CBI is more inclined towards using Qarz al-Hasanah instruments to help enhance financial inclusion and improve financial services across the country.
Interest-free lending is a micro-financing method in Iran for almost four decades. Lenders offer microcredit using their own resources, interest-free deposits and donations.
Loans by banks and credit institutions are mostly larger and come at 18% rendering interest-free funding an affordable option for the common man, especially those at the lowest rung of the society.
Resalat Qarz Al-Hasanah Bank and Qarz Al-Hasanah Mehr Iran Bank are the two main banks that offer low-interest loans. Commercial and specialized banks too allocate some funds to interest-free lending.
According to CBI data, currently 3,000 interest-free funds are operating in the country.
