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Ordinary Iranians are expanding an informal network of savings funds because the established banks are struggling under the impact of international sanctions and bad loans totalling $45bn (€33bn, £30bn).

There is no estimate of how many of these funds exist, but the anecdotal evidence suggests their number is growing and middle-class people are becoming involved in this parallel financial system.

Obtaining loans from banks is becoming more difficult, forcing people to make their own arrangements.

About 30 drivers in a taxi agency in Tehran have shares in sandogh , or fund, number three. Each share costs $2 per day; every month four members of the fund receive loans of $600 each. All member are guaranteed one loan per share during the 10 months the fund is supposed to last.

"It is a savings fund and doesn't have the uncertainty of the banking system, which might or might not give you a loan," says Ahmad, one of the drivers who has four shares and hence can receive four loans. "My mother is also saving money in a fund of housewives among our female relatives."

The head of the taxi agency, along with a driver who is a retired teacher, are jointly trusted to run the fund.

Another driver said the fund helped "us buy the things we cannot afford under normal conditions, like a washing machine, for instance, for which we have zero chance to get bank loans".

The government denies that the formal banking system routinely refuses t... >>>