Amid Lebanese bank failure, Hezbollah’s al-Qard al-Hasan bank, provides financial support
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Alaina
- . January 29, 2021
- . Update: January 31, 2021 3:24 am
As Lebanon has been witnessing worst economic meltdown in its history, especially since the end of 2019, the country’s banking system has been crumbling down gradually, making it very difficult for its citizens to access the money. Many a times depositors have to wait in line for hours and fight with managers to access their own savings. Amid the ongoing crisis and failed economic system, Hezbollah’s al-Qard al-Hasan bank has emerged as a financial lifeline for the country.
Hezbollah’s bank, which operates like a non-profile organisation extending micro-finances to people allows them to take out small, interest-free loans in dollars, and enables them to meet their basic needs including paying school fees, loan for marriage, buying a second-hand car or opening a small venture. The three-decades-old association also provided people with an option of opening a savings account.
The institution, which was believed was established to support the country’s Shiite community, has opened its door to all and over the past year, al-Qard al-Hasan association saw a staggering rise in its number of clients. “People’s lack of confidence in the banking sector forced them to find other places,” said Batoul Tahini, a spokeswoman for the association. The organisation claiming to be financially formidable, has been able to operate successfully despite US Treasury sanctions since 2007.
Roy Badaro, a Lebanese economist explained that Hezbollah’s financial arm was operating in a manner similar to state-within-a-state. He stressed that its banking association was run in a “disguised way to complement their activity through microfinance, similar to Hezbollah-run schools, hospitals, etc.” “The aim is to absorb the economic crisis among poor Shiites,” he said. Badaro warns that the only risk looming over the institution was consistent rise in level of poverty in the country, which might lead to increase in default on the loans, if the economy worsens. The economist added that if that happens then Hezbollah would have to use its own funds to safeguard the deposits.
To put these suspicions to rest, Hezbollah leader Hassan Nasrallah said that its bank has already provided about $3.7 billion of loan amount to some 1.8 million people since it was established. Besides, he also mentioned an instance stating when Israeli warplanes attacked its site in 2006 war, where money and gold was stored, still all the depositors got their money. “No one ever lost a cent,” he said.
As the Lebanese economy shrank 19% in 2020, and people started losing confidence in slowly drowning banking system of the country, started keeping money at home, amounting to about $10 billion. According to Lebanese central bank governor Riad Salameh, this attitude further hit the banking industry, making it more difficult to operate. Lebanon’s failing financial system made al-Qard al-Hasan association emerge as a boon for many, presenting them with an easily accessible alternative to store their cash, minus the tedious banking formalities.Besides, the financial wing of Hezbollah has also been helping the organisation in cementing its place in the country’s political system, despite domestic and international criticism for its association with Iran and promoting Islamic extremist propaganda.
