Iran's complicated bad loans story

Iran's complicated bad loans story

By Dalga Khatinoglu

The amount of bad loans reached about $40 billion in Iran, while the loan-to-deposit ratio in the country's banks on average is in the critical stage.

According to the latest report, published by Fars News Agency on May 11, bad loans have mounted to 1000 trillion rials, and indicate above a 14 times increase compared to nine years ago when ex-President Mahmoud Ahmadinejad took power.

The Central Bank of Iran has not published any updated statistics, but according to mid-2013 data released by the CBI, the total amount of bank deposits were $ 218 billion (based on official exchange rate in Iran then at 25,000 rials to the USD), while the total loans amounted at $206 billion. Then the loan-to-deposit ratio was about 1.058.

The bad loan amount during last ten years

The main increase in bad loans occurred between 2010, mid-2014, a period when Iran's national currency dropped in value by 300 percent.


According to the report published by Fars News Agency citing an anonymous informed official, as well as Iranian official's frequently stated announcements, 67 percent, 21 percent and 11 percent of bad loans belong to those who owe above $400 million, $200 million and $30 million in debt to the banks respectively.

Range of issued bad loans

amount - billion dollar

number of individuals

Above $200 million



Above $40 million



Above $20 million



Above $4 million



Below $4 million


Sixty-two percent of bad loans belong to 988 individuals who have above $4 million in debt to the banks. Getting a loan above $4 billion from a bank is impossible for ordinary people, but those who are involved in business, foreign trade, company shareholders, employers, etc. can receive loans of a huge amount.

One of the main reasons of existing bad loans is the worsening situation in the industrial sector, mostly affected by western sanctions aimed to curb Iran's sensitive nuclear activities.

During the last three years, Iran's economy experienced 5.8 percent and 2 percent contraction, while the country's GDP growth is expected to free itself from negative growth this year.

Seyed-Abrishami, Deputy Minister of Industries & Mines told ISNA in April that

5,400 industrial units in Iran have been inactivated, while 9,097 units (34 percent of total industrial units) in Iran are working under 50 percent capacity and 8, 269 units are working with above 70 percent capacity.

Under the circumstances, the paying back of issued loans for industrial sector activists is quite difficult, while the country needs immediately economic recovery after several years of stagnation.

Abrishami said that about 850 industrial units have had their assets ceased by banks due to bad loans, of which about 700 units became inactivated entirely.

Dalga Khatinoglu is specialist on Iran's energy sector and Iran News Service head in Trend Agency

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