The overwhelming majority of the middle class cannot afford to have decent savings due to low income and high cost of living, the Minister of Cooperatives, Labor and Social Welfare Ali Rabiei said Tuesday.
More than 90% of the people’s savings in banks are less than one billion rials ($32,830) while 80% of the deposits is less than 500 million rials ($16,415). This is “while 90% of the loans were given to 10% of the population and 50% of loan applications were rejected,” Mehr News Agency quoted him as saying.
Stressing the need for a paradigm shift based on pervasive and society-oriented growth, the minister said: “If the banks don’t give credit to small businesses, inequality will not be reduced. We hope to reach a growth of five or six percent with diligence, rationality, trust and tolerance. If we want a growth rate that will have a meaningful impact on our social lives, we need our banking system to make that hift.”
Rabiei cited the imbalance between the income and expenditure of large sections of middle class households as the main reason why the majority of them cannot have decent levels of savings.
“Studies show that bank credits have not been allocated efficiently. And because the resources (money) is channeled into the informal money market, they do not have the necessary positive impact on economic growth.”
