Is it possible to pay a loan with a zero percent interest rate?

This happened while there are various types of interest rates to pay for facilities in Iran’s economy. Although the legal rate of payment of facilities is 23%, but banks have problems in paying facilities at the same rate and long queues have been created to receive facilities.

On the other hand, applicants turn to informal markets to receive facilities and sometimes receive their facilities at rates of more than 40%, which seems a more reasonable number compared to the current inflation of the economy. These problems have been aggravated by the implementation of the bank balance sheet control policy. In the meantime, experts emphasize that it is not possible to separate banks to determine the interest rate. Another important point is that the interest rate of this loan facility is not zero in the real sense; Because in the end, the aforementioned banks did not pay interest to their depositors, and on the other hand, people have to deposit an amount in the bank for several months in order to receive facilities based on that. Therefore, in such a situation, they changed the point of receiving interest to receiving a facility, and this does not mean that the interest rate or fee of this type of facility has become zero.

Expansion of Qarz Al-Hasna facilities

Yesterday, Mohammad Reza Farzin, the head of the central bank, announced the start of payment of Qarz al-Hasneh facilities by a bank up to 300 million tomans and with zero fees. Emphasizing the expansion of Qarz Al-Hasna tradition as one of the central bank’s goals, he emphasized that this institution will not fail in this regard; Because Qarz Al-Hosna banking takes care of most of the non-commercial needs of the people and fulfills the general needs of the people to solve the short-term financing problem. According to Farzin, increasing the loan limit of Qarz Al-Hosna to 300 million Tomans, changing the fee method, modifying the rules of funds deposited in Qarz Al-Hosna, and expanding banking activities in an absentee manner such as account opening and validation were among the actions of the Central Bank in this direction.

Classification of interest rates in banks

However, the point that should be noted is that the separation of banks based on the interest rate can lead to a kind of multiplicity in the country’s banking system. In the current situation, the legal interest rate is 23%. However, Iran’s economy experiences inflation of more than 40%, and this figure for the interest rate indicates a high real interest rate in Iran’s economy, which is considered a serious problem in the economy. This issue has caused long queues to receive facilities in the banking system. On the other hand, by implementing the balance sheet control policy, the central bank has created restrictions on the payment of facilities, which has also caused problems in the supply side of these facilities.

This issue has caused some people to get facilities in informal markets and even be willing to pay much higher interest rates; Just so that they can get the facilities they need quickly. Now, in such a situation, the separation of banks based on the interest rate can cause more damage to the banking system. In general, in a banking system, even if the functioning of the banks is different, the interest rates tend towards each other and are in almost the same range. In such a situation, experts emphasize, although Qarzul-Hosna Banks have a good performance in the banking system, but in the end, the bank interest rate of Qarz-ul-Hosna loans will also be close to the equilibrium market.

Beneficiaries of debt relief

Also, Mohammad Reza Farzin, the Governor General of the Central Bank yesterday, while criticizing the determination of mandatory facilities by the parliament, announced that in the budget bill of 1403, it is proposed to determine the amount of these facilities in the Money and Credit Council in order to control inflation. Debt relief is considered as one of the main problems of Iran’s banking system. Many consider this type of facility as the reason for the disharmony of the banking network and they believe that the government puts its duties on the shoulders of the banks in this way. On the other hand, banks, which are obliged to pay these facilities, are forced to reduce the volume of resources for other facilities. Finally, if the volume of these facilities is large, they will go to overdraft from the central bank, which will ultimately fuel the escalation of inflation.

In such a situation, it should be noted that delegating the authority to determine the amount of debt relief to the Money and Credit Council may worsen the current situation. The reason for that is that the composition of the Money and Credit Council is made up of government appointees who can themselves be the beneficiaries of the debt relief payments, and it is not the case that the people present in this council are monetary and banking experts and it is possible to be sure that the figures will be determined completely expertly. they do.

Is there a zero rate?

Another important issue that should be taken into account in the field of Qarz Al-Hasna facility payment is that although the interest rate in this type of facility is low, the bank does not pay interest on deposits. On the other hand, in order to receive the facility, it is necessary that the deposit remains with the bank for a certain period of time, and the facility is paid to the person accordingly. Therefore, it should be noted that the rate of interest and fees in this type of facility does not become zero, but the person does not receive interest on his deposit, he leaves his money with the bank for several months and receives facilities under these conditions.