30 Percent Leap in Bank Loans

Financial Tribune- Iranian banks allocated 5,484 trillion rials ($146.2 billion) to various sectors during the fiscal year that ended on March 20, 2017, registering a growth of 1,310 trillion rials ($35 billion) or 31.4% compared to the previous year.

According to the latest report published on the Central Bank of Iran's website, the services sector took the lion's share of all the offered loans at 2,179 trillion rials ($58.1 billion), accounting for 39.7% of all the credits extended to economic sectors.

Industries and mining sector, which received 1,609 trillion rials ($43 billion), and the business sector, bagging 724 trillion rials ($19.3 billion), were the next major recipients of credits, accounting for 29.3% and 13.2% of the total loans, respectively.

This is while about 500 trillion rials, accounting for only 9% of all the loans, ended up in the housing sector, which should come as no surprise given the recession afflicting the key sector.

It is important to note that the growth in banks’ loan portfolios should not raise inflationary pressures since the demand for credit is particularly high.

Thus, recapitalization of banks, improvement of their efficiency for providing working capital loans for productive activities, reduction of bad debt and redirecting firms to approach the capital market are recommended.