Why don’t banks lend to people?

Mohammad Reza Jamshidi on the unwillingness of banks to pay for micro-facilities with the slowdown in the payment of bank facilities said: The gap between interest rates on deposits and facilities with inflation has caused many of the facilities paid, not returned to banks and not received because received The facility and its use and further non-repayment is economical. In the most pessimistic case, people are willing to pay the penalty for late payment of facilities. Even in this case, receiving the facility and paying it will be delayed.

“Given today’s inflation rate, it is economically viable for people to use bank facilities,” he said. They say that these measures and the use of banking resources in the face of a very long distance justify the interest rate of the facility and the rate of inflation.

The secretary of the Association of Private Sector Banks added: “The difference between bank interest rates and inflation rates has such negative consequences in the economy, and due to the reduction of banking resources, the banking system is not able to provide facilities.”

Regarding the process of paying micro-facilities to the people, Jamshidi said: “The provision of micro-facilities is determined and defined from the section of mandatory facilities mentioned in the law, and the amount of payment of these facilities in previous years has been many times more than mandatory facilities.” . The source of Qarzat al-Hasna facilities is specified in the law, the budget law does not specify the resources and line for these facilities. The law explicitly states that banks must repay Qarz al-Hasna facilities from the resources they have attracted.

He stressed that due to the fact that the interest rate on deposits is far from the inflation rate and is much lower, people are not willing to deposit in banks, he said: Current deposits of customers who lend it to banks While customers may withdraw their current account at any time, banks must lend the facility to the public for 10 years.

The secretary of the Association of Private Sector Banks said that the point is that the amount of Qarz al-Hasna deposits has decreased a lot and not only Qarz al-Hasna deposits but also bank deposits in general have decreased a lot. We used to see travel, etc. by banks, but we no longer see these advertisements, and banks are not able to take these measures because the deposit process is declining, and the repayment of installments of these loans is either delayed or not paid, hence the amount of deposits. No amount can be allocated for the payment of facilities.

Jamshidi continued: “Banks’ resources do not suffice to pay facilities, even micro-facilities, and withdrawing from the central bank account to pay facilities is unwise because according to the law, banks are subject to a 34% penalty and in this case banks must withdraw from the central bank and pay facilities to people.” They must provide bail. This process of borrowing from the central bank at a cost of 34% and providing collateral to pay facilities of 4% or 18% to people and customers is not reasonable.

He said: “Of course, in the discussion of providing mandatory facilities, the central bank determines the quota of each bank and individuals are introduced to the operating banks to receive the facilities, which there is no problem in the implementation of these people.” ‌

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