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EghtesadOnline: Iran's banks lent more than 7,737 trillion rials ($51.7 billion) in the previous fiscal (ended March 20). The amount was up 26% compared to the year before.

A report released by the Central Bank of Iran indicates that lenders, including state and private banks as well as credit institutions, gave 4,319 trillion rials ($30.31 billion), or 55.8% of the total amount to help raise the working capital of manufactures and trading companies. 

 Compared to the same period a year ago, the volume of loans for augmenting working capital was 531 trillion rials ($3.72 billion) -- up 14%.

Lending for improving the working capital of mines and industries during the period stood at 1,643 trillion rials ($11.53 billion), Financial Tribune reported.

The CBI said the big share of loans for working capital was due largely to the regulator’s concerns about the viability and survival of manufacturing units struggling in the challenging economic conditions coupled with the tanking of the rial, higher raw material costs and the pressures imposed by the new US sanctions. 

However, the CBI warned that despite rising volume of loans, the necessary measures should be taken to discount its inflationary impact born out of rising demand for goods and the ballooning liquidity that has long been a major concern of businesses and economic experts.  

The CBI governor announced earlier in the week that with appropriate measures it was working to ensure that aggregate demand would not jump in the present economic conditions.

Aggregate demand refers to total demand for final goods and services which if raised leads to demand-pull inflation.

 

Other Major Recipients

In terms of other loan destinations, 1,125 trillion rials was paid for creating new businesses, 467 billion rials paid for “development [of business units]”, 155 billion rials for “repair and renovation”, 592 billion rials for “purchasing goods”, and 322 billion rials in home loans. 

According to the CBI website, the services sector had the lion’s share of the loans both in terms of applicants and the amounts paid.

More than 5.5 million applicants in the sector received  2,892 trillion rials ($20.29 billion) during the one-year period.

The next major recipient was the industrial and mining sector followed by the commercial sector, respectively receiving 2,089 trillion rials ($14.66 billion) and 1,125 trillion rials ($7.9 billion). Agriculture and housing had the smallest share of loans.

Loans to the agro sector reached 584 billion rials ($4.1 billion) paid to more than 1.5 million applicants. Housing loans amounted to 1,037 trillion rials ($7.2 billion). 

 

Iran Lending of Banks