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EghtesadOnline: Local banks have collectively paid 198.9 billion rials ($718 million) in loans to 857 knowledge-based companies and startups in the first half of the current Iranian year (March 21-Sept. 22).

According to the Central Bank of Iran’s data, private banks, credit institutions, privatized banks and public banks have respectively paid the highest amount of financial aid to applicants, IRNA reported.

CBI says the share of private banks and credit institutions out of the total figure amounts to 91.74 trillion rials ($331 million), followed by privatized banks with 77.8 trillion rials ($280.8 million) and state banks with 29.3 trillion rials ($105.8 million).

During the six months under review, the lowest amount of loans paid by banks and credit institutions reached 22.63 trillion rials ($81.72 million) in the first Iranian month (March 21-April 22). 

The following month, lending rose to 53.267 trillion rials ($192.3 million) before falling to 49.893 trillion rials ($180.1 million) in the month ending June 21.

In the fourth Iranian month (ending July 22), loans reached a low 33.143 trillion rials ($119.64 million) before embarking on an upward trajectory.

Loans amounted to 53.417 trillion rials ($192.8 million) and 78.698 trillion rials ($284.1 million) respectively in the fifth and sixth fiscal months, with the latter hitting a record high. 

A closer look at the earlier CBI report on the paid loans illustrates that the total amount of loans will probably see an increase compared with last year’s lending.

In April, the bank announced that Iranian banks have lent 321.48 trillion rials ($1.16 billion) to over 800 startups and knowledge-based companies in the last fiscal year (ended March 2021).

CBI chief Ali Salehabadi said Iran has over 10,000 startups and knowledge-based companies and if they were to receive adequate support, they will yield valuable results.

“State support for tech units will continue so as to ensure their constant growth. The technology ecosystem is on its way to flourish further and will soon claim a large share of the domestic economy,” he added.

Officials believe the tech firms’ revenues will ease the domestic economy’s dependence on oil incomes. 

Extending support to new startups and technology firms has been on the government’s agenda since 2013.

 

 

INIF’s Role

The state’s arm, implementing support policies for knowledge-based entities, Iran National Innovation Fund, has provided a variety of assistance to small and well-developed tech companies and startups. 

The fund’s efforts are aimed at increasing the startups’ market value and reducing the country's reliance on oil revenues.

To this end, INIF signed a multilateral deal with four local banks early this month.

Based on the deal, Bank Saderat Iran, Bank Tejarat, Bank Mellat and Bank Ayandeh have agreed to pay loans worth 10 trillion rials ($36.1 million) to startups.

Ali Vahdat, the fund's chief, stated that each applicant company will receive 5 trillion rials ($18 million) in lending, depending on their level of development and number of employees.

“Newly-founded and smaller businesses will receive bigger payouts,” he added.

The official emphasized the importance of seed money for fledgling tech enterprises, noting that a positive relationship has formed over the past two years between local banks and the fund, which offers more integrated financial aid. 

“Over the period, 160 billion rials [$577,600] in loans and grants have been provided to the expanding technology ecosystem. It is hoped that as the number of tech teams grows, so will the amount of aid packages,” he added.

According to Vahdat, the fund directly supports 8,000 knowledge-based companies and startups.

Mohsen Dehnavi, a parliamentarian, who attended the event, stated that the knowledge-based ecosystem has yet to find its place in Iran's economy. 

“Multidimensional support to technology teams, including financial, legal and technical assistance, should be continued until they can expand their share of GDP and become a sustainable source of revenue for the country,” he said.

 

 

Funding Plans

According to the local media, INIF also plans to pay 100 trillion rials ($361 million) in loans to fledgling technology firms via banking system in the current Iranian year (started March 21).

Vahdat noted that the amount of allocation has been increasing in recent years, rising from 30 trillion rials ($108.3 million) in 2019-20 to 50 trillion rials ($180.5 million) in 2020-21.  

This year’s estimated amount is 100% higher than the cumulative loans paid last year.

In an earlier meeting with Bank Saderat Iran CEO Hojjatollah Seydi, Vahdat presented an overview of the fund’s total capital for the current year.

“The National Development Fund, the sovereign wealth fund, is supposed to transfer $200 million to INIF,” Vahdat said.

“The banking system will also assist the institution by continuing to offer help packages to budding tech firms.”

Vahdat noted that Bank Saderat's share would amount to 3 trillion rials ($10.8 million).

Seydi stated that his bank is ready to extend its share of the loan and hoped that the seed capital will be of assistance to new entrepreneurs and tech companies.

“The bank plans to reduce the loan application process for Tehran-based applicants to seven days and other cities to 30 days, if the required documents are submitted with their application,” he added.

To relieve the burden on businesses, Seydi noted that the financial aid would be paid without any interest.

 

Iran Banks