The government has no contingency for marriage loans which are set to double in the March 2022-23 fiscal year, a senior banker said.
Mohammad-Reza Jamshidi, the secretary general of the Iranian Private Banks' Association told ISNA that the interest-free loans provisioned by banks cannot cope with the rising demand from the newlyweds.
Jamshidi was responding to a Majlis decision earlier in the week to double the amount of marriage loans in the next budget.
Accordingly, each of the partners who tied and will tie the knot from March 2018 to March 2023 are eligible for 1.2 billion rials [$4,528] in marriage loans. To encourage early marriage, banks are required to grant 1.5 billion rials ($5,660) per partner if the bride is below 23 years and the groom under 25.
Marriage loans are interest free repayable in seven years. Couples can apply maximum up to two years after the pronouncement of their marriage.
As per the present budgetary rules, each couple can borrow 700 million rials. The amount is one billion rials for couples that marry at an early age.
Jamshidi complained that the parliament has not specified where the lenders should get the extra funds for the interest-free loans to the youth. He pointed to the mountain of pending marriage loan applications, saying that “lenders are already saddled with unprocessed past applications.”
Criticizing such demands from the lawmakers he said, “Such decisions raise expectations from banks and they are treated negatively if they are unable to deliver.”
Over the years marriage loans have increased due to runaway inflation and decline in the purchasing power of the rial depriving many young people to start a family.
In response to the new loan legislation, Mostafa Qamari-Vafa, head of CBI public relations department, urged the parliament to rethink and reconsider the limited potential and resources of banks already facing a high number of bad debts and NPLs.
“This [loans] will add to the shortage of bank liquidity, which will unleash new borrowing from the CBI,” he said on Twitter, adding that the obvious outcome would be higher inflation and mounting public dissatisfaction.
