An estimated 65,000 loans were given in three weeks after the announcement of a rare government initiative promoting collateral-free microloans.
The Economy Minister Ehsan Khandouzi said this in a note on his Twitter account on Monday, citing data from state-owned banks, IRNA reported
“Easing access to microloans based on [personal] credibility appraisal is in the works,” the minister said, warning bank CEOs not complying with new lending order.
Back in January the ministry instructed all banks to give micro loans to salaried employees and pensioners without demanding collateral or guarantors. The CEOs of 13 state-controlled banks were told to accept the new microloan requests.
As per the new rules, pensioners and the salaried can now borrow up to 1 billion rials from banks without putting up collateral.
Instead of collateral, employees should present their salary certificate for loans of up to 500,000 million rials. For loans above this amount they should submit a check or promissory note.
The new lending initiative unleashed strong criticism against the government for overburdening banks with mandates that add to the myriad of problems of the struggling banking industry not unknown for poor performance.
The program reportedly created hassles in its early days in the banks after large numbers of people rushed to borrow.
In response to criticism, the ministry said the banks are not supposed to allocate extra funds for such loans and should use the existing resources but under new lending arrangements.
To address the high demand for microloans, Abbas Hosseini, the ministry’s deputy for banking, insurance and state-run companies, said the collateral-free lending is not all-inclusive and only those eligible can borrow.
“Eliminating guarantors means replacing them with credibility assessment. This simply means that all fix-waged earners can apply,” Hosseini was quoted as saying by the news website of the economy ministry, shada.ir.
Hosseini said only salaried employees with acceptable credibility are eligible for the collateral-free loans.
Earlier the Central Bank of Iran said the basis for credibility assessment will vary and can include a range of factors related to the borrower’s financial performance, including the value and record of previous borrowing, the borrowers’ check transaction performance and even their performance in paying traffic fines and utility bills.
