Economy, Business And Markets

Banks Lent More Than Expected

Banks Lent More Than ExpectedBanks Lent More Than Expected

The Central Bank of Iran (CBI) has revised upward its projection for inflation, saying commercial banks have given large amounts in loans using both their and CBI financial resources in the past year.

The total value of loans provided by banks is predicted to reach 2.85 quadrillion rials ($83.2 billion at market exchange rate) by the end of the fiscal year (March 20), 400 trillion rials more than that already forecast, Banker reported, citing CBI officials.

Since last year, the CBI has pushed banks to give more loans in order to address cash flow problems the manufacturing units are facing.

CBI data shows that in the first half of the year, the banking system allocated over 70 percent – equal to 1.77 quadrillion rials – of its resources.

The majority of the loans were to meet cash flow needs. By December 22, 2014, the figure rose to 2.38 quadrillion rials. It was one month later reached 2.7 quadrillion rials, up by 320 trillion rials.

Out of the total loans provided in the first ten months of the year, agriculture sector accounted for 7.1 percent, industry and mining 31 percent, housing and construction 12 percent and service, and commercial and miscellaneous 49.9 percent.

Some 1.62 quadrillion rials in loans were extended to meet cash flow needs, about 80.7 percent.

The loans provided this year are predicted to hit 3.24 quadrillion rials, according to Ali Akbar Komijani, CBI vice-governor.

However, the official says it may endanger CBI’s goal to curb inflation in the coming year, “as banks have tapped all resources including those of the CBI to provide loans.”