Iran has launched a major collateral-free lending program covering all members of the public amid plans by the government to encourage more business and economic activity in the country after the easing of the coronavirus restrictions.
Iran’s finance minister Ehsan Khandouzi said on Sunday that collateral-free loans had been made available to government and private sector employees in a first phase of the program launched over the weekend.
Khandouzi said that employees will need to submit documents showing they are on payroll of government departments or other organizations to receive up to 500 million rials (US$1,785) of loans from banks in the country.
Credit rating requirements will also be applied by the banks in the process to give out the loans to the clients, he said.
The minister added that collateral-free loans will double to 1 billion rials (US$3,570) and will cover all members of the public in the very near future.
This is a first time Iran rolls out a comprehensive program for collateral-free lending. The measure comes amid efforts by the government to boost economic activity in Iran now the country is emerging from closures and restrictions imposed for nearly two years to curb the spread of coronavirus.
Experts believe the program can give Iranian households more purchasing power at a time they are grappling with high levels of inflation.
The collateral free lending program was finalized earlier this month after a meeting between President Ebrahim Raeisi and CEOs of state and private banks where the Iranian president had urged the lenders to use rating measures instead of collaterals for giving out small loans.
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