Private Banks Not Receptive to Collateral-Free Lending

EghtesadOnline: The secretary of Private Banks and Credit Institutions Association says collateralization is crucial for giving loans and banks are not required to lend without collateral.

News ID: ۷۵۲۱۸۵

14 January 2023

The secretary of Private Banks and Credit Institutions Association says collateralization is crucial for giving loans and banks are not required to lend without collateral.

"Banks need to ensure that borrowers are able [and willing] to repay on time…credit ratings simply cannot be accepted as a security for loans," Mohammad Reza Jamshidi was quoted as saying by IBENA.

Credit rating usually is a factor only for assessing applicants, Jamshidi said. "However, a bank may decide to lend without demanding collateral from applicants with reasonable credit scores."