In the first six months of the current fiscal year banks and credit institutions paid 6,967.2 trillion rials ($25 billion) in loans to businesses.
Based on data from the Central Bank of Iran, the value of loans increased by 3,145.8 trillion rials ($11.23b) or 82.3% compared to last year’s corresponding period.
With more than 4,226 trillion rials ($15.09b) given to assorted sectors, namely mines, industries, housing, agriculture and services, loans to boost working capital of manufactures accounted for 60.7% of the total loans with the mines and agriculture sector topping the list.
On a year-on-year basis, loans to improve working capital rose 2,114.3 trillion rials ($7.55b) -- a whopping 100.1% growth.
Mines and industries accounted for 1,613.4 trillion rials ($5.76 b) in this segment, representing 38.2% of the total lending to boost working capital.
Significant increase in loans could be linked to efforts to address the financial needs of companies as the government struggles as never before to save jobs, mitigate the colossal cost of fighting the Covid-19 pandemic, improve domestic production and curb imports.
Earlier in April, the government had approved 750 trillion rials ($2.6b) in financial aid, from which 500 trillion rials went to SMEs and the remaining to needy households in the form of interest-free microcredit.
Purpose and Sectors
Apart from working capital, banks accepted loan requests from other sectors, namely creating and expanding business, repairs/renovation and buying homes.
Banks lent 924.99 trillion rials ($3.3b) for setting up new businesses. This accounted for 13.3% of the total processed loans. After working capital, lending for setting up new businesses was second.
Purchasing goods was third with more than 672.8 trillion rials ($2.4b) accounting for the 9.7% of the total.
Expanding businesses came in next with 566.58 trillion rials ($2.02b) or 8.1% of the total. This was followed by loans for miscellaneous purposes with 273.1 trillion rials, loans for repairs and renovation 162.42 trillion rials and for first-time homebuyers 141.3 trillion rials.
In the overall economic category, the services sector outperformed others by borrowing 2,445.51 trillion rials ($8.73 b). The next major borrowers were industries and mines with more than 2,128.3 trillion rials ($7.6b). This was followed by the commercial sector at 1,412.7 trillion rials ($5.04b).
The smallest shares went to agriculture and housing each with 498.54 trillion rials and 393.75 trillion rials, respectively.
