Bank Melli Iran, the largest government-owned bank, plans to increase funding for innovative projects and knowledge –based companies.
Mohammad Reza Farzin, the bank CEO, announced this in a meeting with Ali Vahdat, head of the Iran National Innovation Fund (INIF), on Sunday.
"We believe that supporting startups and knowledge-based firms demands an effective and efficient ecosystem, which is being developed in our bank," Ebinews quoted Farzin as saying.
"BMI is willing to provide bigger loans to knowledge-based companies," he said, and expressed readiness to enhance cooperation with the INIF and also establish a joint fund.
BMI has been working to address risks and challenges vis-à-vis funding startups namely in the pharma, oil/gas and petrochemical industries.
According to the available data, there are about 6,600 knowledge-based companies in Iran.
A knowledge-based economy is a system of consumption and production based on intellectual capital, in which a significant part of the company’s value may consist of intangible assets, mainly the value of its workers’ knowledge (intellectual capital).
INIF, as a state fund for innovative projects affiliated to the Vice Presidency for Science and Technology, is currently supporting companies in collaboration with 12 banks and uses capital market instruments such as capital ventures and bonds.
Increase in funding the knowledge economy is an indication of the government’s interest in promoting and encouraging knowledge-based firms. Government officials have voiced support for tech firms and expressed willingness to improve financial support to help them grow.
Data has it that banks gave 509.4 trillion rials ($1.92 billion) to 1,176 companies in loans in the first 10 months of the last fiscal year that ended in March.
The amount was up 126.9% from the corresponding period last year, according to Central Bank of Iran data.
Bank Melli Iran was the biggest state lender to the knowledge economy with 82 trillion rials ($309 million).
Close to 150 trillion rials ($566m) was given by two semi-private banks, namely Bank Mellat and Bank Saderat with 81 trillion rials and 68.8 trillion rials, respectively.
State banks accounted for 28% (141.14 trillion rials) of the loans. Semi-private lenders extended 33% (172.14 trillion rials) while credit institutions and private banks accounted for 196.05 trillion rials ($740m) or 39% of the total.
Economists and experts concur that knowledge-based firms are making a decent contribution to economic growth by, among other things, adding value.
Recent reports said goods and services handled by knowledge-based companies is in the region of 900 trillion rials ($3.3b) a year. A decade ago it was hardly 2 trillion rials ($7.5m).
