Iran’s Mahr Bank Launches Major Qard-al-Hassan Loan Expansion, Raising Ceiling to 5 Billion Tomans
In a significant move to bolster public economic engagement, Iran’s Qard-al-Hassan Mahr Bank has announced a substantial increase in its interest-free loan ceilings for citizens and businesses, following a new directive from the Central Bank of Iran.
Enhanced Financial Support for Citizens and Enterprises
Mr. Gholamreza Fathali, the CEO of Mahr Bank, detailed the new regulations. The ceiling for individual Qard-al-Hassan loans has been raised from 4 billion to 5 billion tomans. Furthermore, small businesses and guilds can now access loans of up to 10 billion tomans, while companies are eligible for facilities reaching 15 billion tomans. The bank also now has the capacity to issue guarantees worth ten times these amounts.
Streamlined Process and Rapid Disbursement
In response to inquiries about the new 5-billion-toman loan, Fathali confirmed that disbursements will begin next Saturday. The collateral for these loans is based on an account scoring system and credit assessment, a method approved by the bank’s Sharia committee. The repayment period for this loan is a maximum of 60 months.
The bank also offers expedited 1-billion-toman emergency loans. Applicants with a pre-existing account score can receive these funds without a separate credit assessment, often within hours. The ceiling for unguaranteed loans with credit assessment has also been doubled, from 500 million to 1 billion tomans.
New Mandate and Expanded Banking Services
These changes are part of a broader strategic shift mandated by Iran’s Seventh Development Plan, which tasks the Central Bank with specializing financial institutions. The High Council of the Central Bank has approved a new directive for Qard-al-Hassan banks, granting them expanded operational capabilities.
Fathali explained that this new directive allows Mahr Bank to offer services beyond traditional interest-free loans. This includes core deposit and facility services, API-based financial services, capital management, foreign exchange services, and issuing bank guarantees. “We will provide all necessary services to our customers like a standard commercial bank,” Fathali stated, “but we will not attract investment deposits. We can provide facilities at a 4% rate through other contracts like Murabaha.”
A Year of Robust Growth and Stability
Highlighting the bank’s strong performance, Fathali reported a current capital of 15 quadrillion tomans, 90% of which is from retained earnings. The Central Bank has allocated a 5-quadrillion-toman capacity for capital increase, with plans to reach 20 quadrillion by year-end.
Performance metrics for the past year are robust: 62% of loans were disbursed remotely, a figure the bank aims to increase. The capital adequacy ratio stands at a healthy 8.63%, exceeding the 8% standard. The bank’s resources grew by 39% to 516 quadrillion tomans. During this period, Mahr Bank processed approximately 5 million loans valued at 405 quadrillion tomans, securing its position as the leading provider of such facilities in the country. The average non-performing loan ratio remained impressively low at under 1%.
The bank has also seen remarkable growth in its customer base, attracting over 3 million new clients in one year to surpass 21 million total customers, with 53% of accounts opened remotely.
Future Initiatives and Social Commitment
Looking ahead, Mahr Bank plans to develop a neo-bank and establish a Qard-al-Hassan think tank this year. Demonstrating a strong commitment to social responsibility, the bank has allocated 7.4 billion tomans to social initiatives. In a first for the sector, the bank has also established a dedicated Sharia committee alongside its existing religious supervisor to ensure all operations align with Islamic principles.