Businesses borrowed 17,274.3 trillion rials ($57.5 billion) in the first eight months of current fiscal year (March 21-Nov 20).
Compared to the same time last year, loans increased by 6,426.6 trillion rials ($21.4b), up almost 60%, according to data published by the Central Bank of Iran.
As usual working capital loans topped the list. Companies took out 11,481.4 trillion rials ($38.2b) in loans and credit to boost working capital, accounting for 66.5% of the total loans.
The CBI said the substantial rise in lending indicates that lenders are giving more importance to working capital under the difficult economic conditions for businesses across the board.
It also reflects lenders’ concerns about the viability and solvency of manufactures struggling due to the increasing challenges largely emanating from the brutal pandemic, rising raw material prices and the omnipresent volatility in currency prices.
Borrowers in the mining and industry sector were the main recipients of working capital loans with 4,069.3 trillion rials ($13.5b) accounting for 35.4% of the total working capital loans.
Mineral and industrial firms took 5,157.4 trillion rials ($17.2b) in the eight months. Waccount for 78.9% of the total banking funds injected into the sector.
Apart from working capital, banks gave loans for creating and expanding business, repairs/renovation and buying homes.
Banks paid 1,941.6 trillion rials ($6.4b) for setting up new businesses, 1,383.7 trillion rials ($4.6b) to expand businesses, 376.6 trillion rials ($1.2b) for repair and renovation, 1,172.4 trillion rials ($3.9b) for purchasing goods and 232.9 trillion rials ($776 million) to homebuyers. Miscellaneous loans amounted to 685.1 trillion rials ($2.2b).
In terms of overall ledning, a big portion of banking resources went to the services sector with 7,329.1 trillion rials ($24.4b).
The next major recipients were the industries and mining sector (5,157.3 trillion rials) followed by trade at 2,665.7 trillion rials ($8.8b).
As always, agriculture and housing were at the bottom end of the loan recipients. Farmers borrowed 1,280.5 trillion rials ($4.2b) and people and businesses in construction sector took out 906.8 trillion rials ($3b).
The CBI said despite the rise in lending, measures need to be taken to curb the inflationary impact from the rising demand for goods.
Banks are expected to give higher priority to meet the financial needs of companies as the government struggles to save jobs, mitigate the detrimental impact of the pandemic, improve domestic production and cut imports.
