Banks and credit institutions in Iran paid 2,247.8 trillion rials ($9.7 billion) in loans during the first three months (March 20-June 21, 2020) of current fiscal year.
Compared to the corresponding period last year, lending rose by 754 trillion rials ($3.2b) to post an annual 50.5% growth, the Central Bank of Iran reported on its website.
Majority of loans went to businesses to help boost working capital. Total loans given for working capital needs amounted to 1,406.8 trillion rials ($6b), it being the biggest share (62.6%) of all lending in Q1.
Working capital loans increased by 522.9 trillion rials ($2.2b) in the said period, which shows 59.2% growth compared to the same period last year.
Mines and industries got a fair slice with 587 trillion rials ($2.5b), which accounted for 41.7% of the total 1,406.8 trillion rials given to specifically to boost working capital across economic sectors.
As per CBI data, working capital loans accounted for 79.4% of the total given to mining and industrial companies.
The substantial rise in lending indicates, among other things, that banks are becoming aware of the pressing need to support businesses struggling to survive and meet their financial commitments during increasingly difficult times as the economy falters.
Banks have been singled out routinely in recent years for poor management, inefficiency and largely abandoning the purpose of their being (lending to lift real economic growth).
The CBI, however, has stressed that despite the rise in lending, measures should be taken to curb the inflationary impact from rising aggregate demand and the ensuing increase in money supply.
Services Sector Atop
In terms of the value of loans, the services sector topped the list with 758.2 trillion rials ($3.3b).
Industries and mines were next with 7,395.5 trillion rials ($32 billion). This was followed by the commercial sector with 466.49 trillion rials.
As is usually the case, the agriculture and housing sectors were at the lowest end of the ladder. Loans to farmers reached 145.6 trillion rials and the housing industry borrowed 136.4 trillion rials.
Apart from working capital loans, banks gave money to help companies expand and renovate. Homebuyers were also among the recipients. Home loans given by banks in Iran hardly account for 10-20% of the price.
Banks gave loans worth 251.7 trillion rials for setting up new businesses, accounting for 11.2% of the total.
The reports said 188.3 trillion rials was given for developing businesses, 56 trillion rials for repair and renovation and 215.7 trillion rials for purchasing goods.
Homebuyers received 48.9 trillion rials while loans for miscellaneous needs amounted to 80 trillion rials.
