Banks injected more than 18,989.2 trillion rials ($82.5 billion) into the economy in the last calendar year (ended March 20). The amount was up 9,239.3 trillion rials ($40b) or 94.8% compared to the year before.
The Central Bank of Iran said lenders, including state and private banks plus credit institutions, gave 11,635 trillion rials ($50.5b), or 61.3% of the total amount to help raise working capital of manufactures and other businesses.
Compared to the 12 months a year ago, the volume of loans for augmenting working capital was up 120% or 6,373 trillion rials ($27.7b).
Mining and industrial units were the main recipients of working capital loans at 3,662 trillion rials ($14.4b) representing 37.6% of total.
The CBI said the dominant share of loans for working capital was due largely to serious concerns about the viability and survival of manufactures struggling under the dire economic conditions.
While part of the growth could be linked to inflation and devaluation of the national currency, data shows annual lending was about 60 percentage points higher than point-to-point inflation y/y.
Government supportive measures to help mitigate the economic impact of the coronavirus pandemic was one of the factors behind the upsurge in lending. Banks gave 750 trillion rials ($3.3b) to households and businesses hit by Covid-19.
However, the CBI warned that despite the rising volume of loans, measures are needed to curb its inflationary impact born out of the rising demand for goods and the exploding money supply that has emerged as a major source of anxiety for businesses and economic experts.
According to the CBI report, most loans paid in working capital was used by the mining and industries sector. Companies in the two sectors got 4,354.3 trillion rials ($18.9b) representing 37.4% of the total loans.
Apart from working capital, credit was given for setting up and expanding businesses, repair and renovation and to first-time home buyers.
Banks lent 2,432.8 trillion rials for setting up new businesses, 2,121.3 trillion rials to expand businesses, 426.14 trillion rials for repair and renovation, 1,505 trillion rials for purchasing goods and 287 trillion rials to homebuyers. Miscellaneous loans amounted to 581 trillion rials.
After working capital loans, establishing new businesses was the second priority with 12.8% and business expansion third at 11.2%. Overall, a big portion of banking resources went to the services sector with 7,443.4 trillion rials. The next major recipients were industries and mining companies with 5.797 trillion rials followed by commercial companies at 3,319 trillion rials.
As always, agriculture and housing loans were at the bottom end. Farmers borrowed 1,265 trillion rials and homebuyers took out loans worth 1,048 trillion rials.
