Banks paid an estimated 23,312 trillion rials ($66.02 billion) in loans in the first seven months of the current fiscal year (started in March 2022), registering 47.2% growth on the same period last year.
The Central Bank of Iran said on its website that individual borrowers accounted for 7,468 trillion rials ($21.15 billion) or 32% of the loans during the period. The major part ($44.8b) went to businesses.
Loans to individuals increased by 55% year-on-year, and to companies was 43.8% higher.
The report reflected on lenders' performance in allocating microloans, i.e. loans worth 2 billion rials or less. Banks processed 4,855 trillion rials ($13.7b) in microloans during the seven months -- 39.4% higher on the same period last year.
Credit was to the tune of 867 trillion rials ($2.45b), posting 116.8% increase on the corresponding period last year.
Total loans per applicant higher than 2 billion rials posted 87% growth. Observers say that the growing demand for housing loans can be the reason behind the jump in such lending.
According to CBI data, total outstanding loans, both non-performing and performing, climbed to 11,672.8 trillion rials ($33.06 billion) reaching 47,143.6 trillion rials ($133.5b) by October 22. That was 32.9% higher from the same period last year.
With 28,057.1 trillion rials ($79b), Tehran Province topped the list in terms of outstanding loans. At the bottom end was Kohgilouyeh-Boyerahmad Province with 179.6 trillion rials ($508 million).
Lending to Knowledge-Based Companies
CBI data showed that banks and credit institutions gave 740.1 trillion rials ($2.09 billion) to knowledge-based companies, posting a growth of 121.9% compared to last year.
The loans were given to 1,515 firms. The increase reflects the inclination of the banking sector to support the rising number of knowledge economy, the CBI said.
The CBI has pledged to increase financial support to startups, saying new measures will be announced to help ease collateral such firms need for borrowing from banks.
CBI data indicates that private banks were more eager to finance knowledge-based companies collectively allocating 44.5% of the total loans in the seven months. Private lenders posted 215% growth in loans to knowledge-based firms.
Private banks accounted for 41% of the loans, 123% higher than the year before.
Bank Melli, Bank Sepah and Post Bank, three commercial banks owned by the government, accounted for 9.4% of total loans during the period.
The share of five specialized banks, all owned by the government, in financing knowledge-based firms was 4.9%.
The upsurge in funding the knowledge economy show the government’s resolve in boosting such firms, largely staffed by the youth. The administration has voiced support for tech firms and expressed willingness to increase financial support to help the tech ecosystem grow.
Interest-Free Loans
Lenders have been ordered to continue lending in the Qarzol-Hasanah (interest-free microcredit) schemes despite rising concern over its detrimental impact on bank finances.
An estimated 1,080 trillion rials ($3.22b) loans has been given to low-income people, namely to bolster youth marriage and childbirth and support citizens wanting to rent a home.
Banks accepted 478,000 applications for childbirth loans worth 192 trillion rials ($573 million) in seven months, 800 trillion rials ($2.38b) in marriage loans to 580,000 applicants in the same period.
Lenders gave security deposit loans worth 73.1 trillion rials ($218m) to 128,000 applicants wanting to rent a home.
Senior bank and economic authorities have routinely censured the Majlis for imposing extra burden and hefty obligations on banks to keep lending beyond their ability and capacity.
The government initially had projected mandatory lending by banks at 6,000 trillion rials ($19.3 billion) in the current fiscal year. But MPs increased the amount to 13,000 trillion rials ($42b) apparently oblivious to the weak performance of banks most of which are already struggling with troubled balance sheets.
