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EghtesadOnline: Based on guidelines approved by the Money and Credit Council, Iranian banks have been obligated to allocate at least 11.6% of their loans to the agriculture sector.

According to the directive released by the decision-making body headed by the Central Bank of Iran’s Governor Valiollah Seif, the agent bank (non-specialized lenders) is obligated to allocate at least the equivalent of the share of the agriculture sector in the country’s gross domestic product to that sector each year at updated prices, the official website of the central bank reported.

The measure was first passed by the parliament during the previous fiscal year that ended on March 19, 2016.

The latest official report on Iran’s GDP indicates that the agriculture sector has had a share of 11.6% in economic growth.

Based on the guidelines, which are part of the Law to Remove Barriers to Competitive Production and Improve the Financial System of the Country also approved by MCC, the central bank will annually announce the share of agriculture industry in the economy to the agent bank, according to the latest GDP data, Financial Tribune reported.

CBI advises the banking network to communicate the orders to all branches and affiliated units in the shortest period of time, given the importance of the sector for the nation’s economic prosperity.

Bank Keshavarzi, the specialized bank of the agriculture sector, separately works to provide finance to the key sector.

The law asserts that all non-specialized banks are bound to allocate a share of their loans to the agriculture sector, which at its minimum should be the equivalent of the sector’s share in the country’s economy, based on the latest GDP figures.

The parliament had decreed that the Money and Credit Council and the Central Bank of Iran are obligated to notify the measure within three months of its approval. The law specifies that the Central Bank of Iran will report on the law’s implementation for each bank to the Majlis Agriculture, Water and Natural Resources Commission every six months.  

The Statistical Center of Iran’s latest report shows agriculture and services sectors experienced a 5.9% and 5% growth respectively during the first six months of the current fiscal year (started March 20, 2016).

According to SCI, Iran’s GDP growth for the period under review stood at 6.5%, including the growth in oil sector and 4.5% without it.

Iran Banking Iran agriculture