The Banking Overhaul Plan, signed by President Hassan Rouhani in early July, allows the banking sector to finance innovative schemes, which “will positively impact the growth of the knowledge-based economy,” according to the deputy for management and resource development at the Vice-Presidency for Science and Technology.
“Before the enactment of the plan, banks were not financing knowledge-based firms, due to the risks associated with such companies. Banks had an aversion to high risk and we could do nothing to change their attitude,” Mehr News Agency quoted Alireza Daliri as saying on Wednesday.
The reform plan allows banks to give credit to innovative industries, by placing them in a special lending category. It seeks to tackle the most pressing issues facing sick banks. Among other things, it seeks to get financing for short and medium-term projects back on track, provide a cash cushion to tackle bad loans, promote competition, reorder the money market by regulating uncertified credit and financial institutions, and increase banks’ lending power by raising their capital.
Earning higher yields is the other side of the coin when it comes to investing into risky businesses, he said. “Almost 60% of high-tech proposals fall short of making profit for the investors, 20% of them yield average profit, but windfall from the remaining 20% are enough to compensate all of this.”
A knowledge-based economy is a system of consumption and production based on intellectual capital, in which a significant part of a company’s value may consist of intangible assets, mainly the value of its workers’ knowledge.
Currently, 2,430 knowledge-based companies are officially registered with the Vice President’s Office for Science and Technology, 782 of which are active in the production sector and 179 firms are industrial. They created an estimated 40,000 direct jobs in two years.
The official noted that cheap loans, tax holidays and insurance coverage should help lower the risk of investment in knowledge-based firms.
Asghar Noorallah Zadeh, director of Omid Entrepreneurship Fund, believes that attracting funding is the innovators’ main challenge for commercializing their innovations and ideas.
“Small loans with flexible terms would be the best solution for helping knowledge-based companies getting off the ground,” ISNA quoted him as saying on Friday.
Earlier in May, the government unveiled an incentive package to boost non-oil exports in which banks are required to give loans to knowledge-based companies at 14%. The National Development Fund of Iran was due to provide the resources for the package.
Recently banks have shown more interest in supporting innovative industries through a variety of methods. For instance, in April Bank of Industry and Mine signed a contract with Amirkabir University of Technology to help innovators market their ideas. BIM is set to establish a specialized advisory task group to help entrepreneurs conduct market research and develop their business. Tejarat Bank announced on Thursday that being “knowledge-based” is among the bank’s new criterion for assessing companies that seek credit.
