Banks and credit institutions gave 1,347 trillion rials ($3.8 billion) in loans to encourage youth marriage and childbirth since the beginning of the calendar year in late March
The Central Bank of Iran said Thursday the money was given to 1.57 million hard up applicants in little less than nine months.
“Banks processed 680,000 loan applications worth 320 trillion rials [$906 million] to promote childbirth,” the CBI said in a press release seen on its website.
Lenders were obliged in mid-April to give loans to new parents to encourage childbirth. The money is given to new parents from low-income households who have 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 930 trillion rials ($2.63 billion) in marriage loans went to 720,000 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.
Senior bank and economic authorities have routinely censured the Majlis for imposing the extra burden and hefty obligations on banks to keep lending beyond their ability and capacity
Increase in lending is with the aim to boost 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.
Lenders are obliged to continue lending as Qarzol-Hassanah (interest-free microcredit) amid valid concerns about the detrimental impact of mandatory lending on bank financial performance.
According to CBI, lenders also gave security deposit loans worth 97 trillion rials ($274.7 million) to 170,000 people wanting to rent a home in the same period.
Security deposit loans were announced by the government in 2020 after the coronavirus struck. The move was to support those unable to rent a home due to the historic increase in rents and home prices.
Lenders have been instructed to 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 Majlis 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 increased it to 13,000 trillion rials ($42b) apparently oblivious to the weak performance of banks most of which are already struggling with troubled balance sheets.
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.
“However, since its own resources were few and far between, it turned to public and private banks and in the process transformed them into its piggy bank," he said.
