Banks and credit institutions gave 29,681.6 trillion rials ($107 billion) in loans and credit in the last fiscal year that ended in March.
Recent data released by the Central Bank of Iran show that lending rose 54.1% or 10,414.4 trillion rials ($37 billion) from the year before.
As usual working capital loans topped the list. Businesses took 19,378.6 trillion rials ($70.4b) to boost working capital, accounting for 65.3% of the total loans.
The CBI said the jump in lending indicates banks now are giving more importance to working capital under the difficult economic conditions.
It also reflects lenders’ concerns about the viability and solvency of manufactures struggling due to the increasing economic challenges.
As is usually the case, borrowers in the mining and industry sector were the main recipients of working capital loans with 6,951.9 trillion rials ($25.2b), accounting for 35.9% of the total working capital loans.
Mineral and industrial firms borrowed a total of 8,979.6 trillion rials ($32.6b) in the 12 months. Working capital loans represented 77.4% of the total banking funds injected into the key sector.
Apart from working capital, loans were given for other needs, including creating and expanding business, repairs/renovation and buying homes.
Banks gave 3,476.8 trillion rials ($12.6b) for setting up new businesses, 2,470.4 trillion rials ($8.9b) to expand businesses, 607.9 trillion rials ($2.2b) for repair and renovation, 2,109.5 trillion rials ($7.6b) for purchasing goods and 493.8 trillion rials ($1.8b) to homebuyers. Miscellaneous loans were put at 1,144.3 trillion rials ($4.1b).
In terms of overall economic sectors, a big part of bank resources went to the services sector with 12,394.2 trillion rials ($45b).
The next major recipients were industries and mining (8,979.5 trillion rials) followed by trade 4,472.2 trillion rials.
As in the past, agriculture and housing sectors were at the bottom end. Farmers borrowed 1,989.7 trillion rials ($7.2b) and people and businesses active in the lucrative construction sector took out 1,834.5 trillion rials ($6.6b).
Despite the rise in lending more needs to be done to curb the inflationary impact of rising demand for goods, the regulator noted.
The CBI recently launched a supply chain finance mechanism to mitigate the impact of loans on the already hyperinflation that has become a major challenge for millions of Iranians, especially fixed-wage earners and retirees.
The new SCF was introduced in February to foster economic growth by facilitating funding for manufactures in non-inflationary ways.
Earlier, the CBI governor, Ali Salehabadi, said the SCF program is supposed to shoulder the burden of financing manufacturing firms by almost 50%, effectively cutting the need to borrow directly from banks.
