In the last fiscal year (ended March 20), banks gave 1,690 trillion rials ($3.3 billion) in social assistance loans to 1.94 million low-income applicants largely for youth marriage, childbirth and to those wanting to rent a home.
According to the public relations department of the Central Bank of Iran, banks accepted 824,900 applications for childbirth loan worth 330 trillion rials ($647.5 million) in the year.
Banks were ordered last year 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.
Some 1,230 trillion rials ($2.4 billion) were marriage loans to 896,000 applicants, up 55% year-on-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 last year. As per the 2022-23 budget, each partner who ties the knot is eligible for 1.2-billion-rial loan. To help encourage marriage, lenders give 1.5 billion rials per partner if the bride is below 23 years and the groom under 25.
Increase in 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.
According to the CBI, lenders gave security deposit loans worth 130 trillion rials ($254.9m) to 224,460 applicants wanting to lease a dwelling place.
Security deposit loans were announced by the government in 2020 in the framework of the coronavirus aid package for the large numbers unable to rent a home due to the unprecedented increase in rents and home prices.
Lenders were required 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 different urban areas.
New Obligations
Banks are obliged to lend in the form of as Qarz-ol-Hassanah schemes (interest-free microcredit) despite mounting concern about the detrimental impact on the already troubled and often-censured banking industry.
The subsidized loan schemes demanded from banks has undermined their already overstretched resources and pushed many in a precarious condition.
Prominent economists and senior bankers have censured policy and decision-makers for imposing such obligations on banks to keep lending beyond their ability and capacity.
In fiscal 2023-24 banks have been ordered 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 worsening cost-of-living crisis.
The Majlis Social Commission has raised the ceiling for marriage loans in fiscal 2023-24
Debating the new budget, lawmakers decided to increase the loan by at least 25%. If it becomes law, the amount will increase from the present 1.2 billion rials to 1.5 billion rials per couple, said Vahid Yaminpour, deputy minister of sports and youth affairs, dolat.ir reported.
The loans will increase to 4 billion rials per couple if the bride is below 23 old and the groom under 25, he said.
As per the plan, first-time parents are eligible for 300 million rials for the first child. They can receive 600 million rials for the second child, 900 million rials for the third, 1.2 billion rials for the fourth and 1.5 billion rials for five children and more. The loans are at 4%.
Disparities
A recent study by the Majlis Research Center found major disparities in the process of allocating marriage loans. The study seen on the website of the influential parliamentary think tank showed only 46% of marriage loan applicants managed to get the money. The figure was 66% in the previous year.
MRC said banks in some province have made the “bureaucracy of assessing loan requests more multifaceted as they interview couples and make 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 says those in this age bracket are not eligible for such loans.
According to the rare parliamentary 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 above 25. The think tank proposed a revision of methods for checking the authenticity of marriage contracts.
