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Lending Improves by 44%

Lending Improves by 44%Lending Improves by 44%

In the twelve months ending March 20, 2015, banks allocated slightly more than 2 quadrillion rials ($70.7 billion) in loans as cash flow, which comprised 60.7 percent of total lending by commercial banks.

The figure rose by 797.1 trillion rials year on year, registering 62.6 percent growth, according to the latest report by the Central Bank of Iran.

During said period, diverse economic sectors received a total of 3.4 quadrillion rials in loans. The lending grew by 44.5 percent from last year, when the figure stood over 1 quadrillion rials.

The industry and mining sector received loans totally worth of over 1 quadrillion rials, of which 861.6 trillion rials was allocated to settle cash flow problems, accounting for 80.9 percent of the total loans allocated to the sector.

Critics however have warned officials against the possible inflationary effect of the rising lending trend, as it would inject large amounts of cash into the economy.

As a solution, they suggest that it is necessary to pay more attention on improving the lending power of the banks through measures such as recovering non-performing loans and restoring them to the lending cycle.

This would improve banking productivity in providing cash flow to the manufacturing sector and directe manufacturing enterprises to the capital market as an effective tool to provide funding for economic projects.

Financialtribune.com