The loan to deposit ratio (LDR) declined for nine months to December 22 by 82.4%, which was 0.3 percentage points lower than the beginning of the fiscal year last March at 83%, the Central Bank of Iran reported on its website.
The ratio was 1 percentage points higher from the same period last year. LDR is used to assess a bank's liquidity by comparing the total loans to total deposits for a specific period and is expressed in percentage.
If the ratio is too high, the bank may not have enough liquidity to cover unforeseen fund requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it should be.
The CBI, however, noted that the LDR was not consistent across provinces. In Tehran Province it was 91.4% and in Kohgilouyeh-Boyerahmad Province 110.9
Consecutive declines in LDR either indicate bank unwillingness to lend or restrictions imposed by the CBI.
Earlier, the Economy Ministry announced that the regulator had imposed limits on lending by dysfunctional banks. The limits were described as corrective policy to tame weak banks plus a cautionary move by the regulator to curb unbridled issuance of money by troubled lenders.
In a press release seen on its website, the ministry said that outstanding loans increased by 12.1% in the first half of current fiscal year (ended Sep 22).
Outstanding loans (performing and non-performing) exceeded 46,343 trillion rials ($114.14 billion) -- up 32.7% y/y, it said. During the same period last year total outstanding loans were reported in the region of 37,175 trillion rials ($91.5b).
Again, Tehran Province topped the list with the highest number of loans, crossing 28,930 trillion rials ($71.2b). As for deposits, data show 66,480 trillion rials ($162.7b) was held by banks and credit institutions in the month to December 22.
Total deposits increased by 31.5% on the same period last year. The figure grew by 20.2% during the first eight months of the fiscal year.
Knowledge-Based Loans
The CBI said banks and credit institutions gave 1,132 trillion rials ($2.78 billion) to knowledge-based companies in the nine months, up 143.5% from last year.
The money went to 1,792 firms reflecting the inclination of the banking sector to support the knowledge economy, the CBI said on its website.
The regulator has pledged to increase support to startups, saying new measures will be announced to help ease collateral such firms need for borrowing.
CBI data indicates that non-government banks are seemingly more inclined to finance knowledge-based companies collectively allocating 85.4% of the total loans in the nine months. Private lenders posted 188.1% growth in loans to such firms.
Privatized banks, namely Bank Mellat, Bank Saderat and Tejarat Bank, collectively gave 446 trillion rials ($1.04 billion) or 39.4% of the loans during the period to 972 knowledge-based companies.
Bank Mellat topped the list in terms of loans to startups with 163.8 trillion rials ($425.4m), followed by Tejarat Bank and Bank Saderat.
Bank Melli, Bank Sepah and Post Bank, three commercial government-owned lenders accounted for 9.5% of total loans during the period. The share of five specialized banks, all owned by the government, in financing knowledge-based firms was 5.1%.
The CBI provided data on knowledge-based company loans in the ninth month of the fiscal year (ended Dec 22) stating that banks paid 130.5 trillion rials ($321.43m) to 636 applicants, up 109.7% on the same period last year.
According to data published by the Vice Presidential Office for Science and Technology, more than 7,000 knowledge-based companies are active nationwide.
The improvement in funding the knowledge economy shows the government’s resolve in boosting such firms, largely staffed by the youth. The Raisi administration has voiced support for tech firms and expressed willingness to increase funding to help the tech ecosystem grow.
The scope of a knowledge-based economy is not limited to the tech industry, it can also be used in other sectors like IT, nanotechnology, biotechnology and others.
Iran’s knowledge economy largely depends on the banking industry for funds, but there are plans to help them access funding via the capital market.
