Economy, Business And Markets

The Marriage Loan Saga

The Marriage Loan SagaThe Marriage Loan Saga

The central bank responded to criticism that it fell short of expectations on provision of free-interest loans to newly-weds.

In a statement released online on Monday, the bank rejected a recent claim by three parliamentarians that it failed to offer a “fair amount” of its financial resources in marriage loans.

Monetary officials argued in the statement that there is no law requiring them to grant loans to young couples. Contrariwise, they said, the budget law obliges them to use the resources allocated for free-interest loans for prisoners and the needy, and not the newly-weds.

In the fiscal year ending March 20, the central bank had only 43.3 trillion rilas in resources to be used for charitable purposes, the CBI statement said. “There has been no mention of resources for young couples in the law,” it added.

Earlier three MPs, Abouzar Nadimi, Ezatollah Yousefian and Moussa-reza Servati, lashed out in an interview with the media outlet Fard at the central bank over its failure to help young people marry.

The ceiling of a marriage loan has this year decreased to 30 million rials ($868 at market rate) for each person from a previous 50 million rials ($1447).

In his interview, Yousefian accused the banking system of wasting resources by providing large loans for certain businesspeople, which are not yet able to pay their debt.

The previous government made commercial banks finance profligate projects and provide businesses with cheap loans. Many of the borrowers have now failed to pay back due to economic hardships and international sanctions, pushing total non-performing loans (NPLs) of the banking system to over 938 trillion rials ($27.1 billion).

Now lenders are hardly able to give loans for charitable purposes.

The issue to provide cheap loans to young couples came under the spotlight after political leaders in Tehran encouraged young people to marry and have more kids to compensate the slow pace of population growth.