The Majlis Research Center (MRC) has singled out banks and credit institutions for special criticism for what is said is their poor performance in extending loans for marriage and child birth in the first eight months of the current fiscal year (ends in March).
A study published on the website of the influential think tank showed 46% of marriage loan applicants managed to get the money. The figure was 66% during the same period last year.
Marriage loans are interest-free repayable in seven years. Couples can apply up to two years after the pronouncement of their marriage.
The government doubled marriage loans for this year.
Banks gave 738 trillion rials ($2.71 billion) in marriage loans to 533,377 applicants in the said period. This is while, the study says 1.115 underprivileged individuals had applied for the marriage loans.
West Azarbaijan Province recorded the worst lending performance in this category as only 36% of the applicants received the money. MRC said banks in this province have made the “process of assessing loan requests more complicated as they interview couples and conduct local enquiries about the authenticity of the marriage.
The report also reviewed age groups, based on which lenders gave applicants aged 50 years and above 1,109 trillion rials in marriage loans. The Central Bank of Iran says those in this age bracket are not eligible for such loans.
According to the rare study, there has been a huge age gap between couples tying the knot. Almost half the women who took out loans were 23 or younger, while 64% of men were aged above 25.
The think tank proposed a revision of methods for checking the authenticity of marriage contracts.
Government lending is to help boost population growth. In recent years sociologists have warned that the population is ageing and the youth are mostly disinclined to start a family or have children due to the unstable economic conditions, galloping inflation, prohibitive housing costs and an uncertain future.
The study also found out that banks had an “unacceptable” performance in paying childbirth loans, as 60% of the applicants were left behind.
According to the CBI public relations department, banks processed 523,000 applications for childbirth loan in the eight months, while the total number of applicants exceeded 1.280 million during the eight months.
Banks were ordered in mid-April to lend to young parents to encourage childbirth. The money is given to couples who had a child in the previous fiscal year (March 2021-22) and after.
First-time parents are eligible for 200 million rials for the birth to the first child, 400 million rials for the second child, 600 million rials for the third, 800 million rials for the fourth and 1 billion rials for five children and more.
The study said lack of resources, galloping inflation plus stringent CBI rules related to banks’ financial statements had hindered childbirth loans.
It also claimed that banks had breached government rules on collateral demanding loan applicants provide more than one guarantor.
Banks are obliged to lend in the form of as Qarz-ol-Hassanah schemes (interest-free microcredit) despite mounting concern about the detrimental impact of such a heavy burden on the already troubled banking industry.
Prominent economists and senior bankers have censured policy and decision-making bodies for imposing such obligations on banks to keep lending beyond their ability and capacity.
The subsidized loan schemes demanded from banks has undermined their already overstretched financial resources and pushed many in a precarious condition.
In fiscal 2023-24, banks and credit institutions are mandated to allocate up to 2,000 trillion rials ($4.92 billion) in interest-free lending for government-led programs like loans to newlyweds, for childbirth and to support households struggling with the cost-of-living crisis.
The new CBI boss Mohammad Reza Farzin has urged the parliament to take banks' shrinking resources into account before deciding the lending largesse. Referring to the 2023-24 budget bill being debated in parliament, he urged MPs not to order banks to give loans as it would further undermine the troubled banks and the overstretched banking industry.
