China will further promote financing services for small and micro enterprises this year based on two principles－keeping risks controllable and making the lending business commercially sustainable, said officials of the China Banking and Insurance Regulatory Commission on Jan 11.
“The banking and insurance regulator will optimize regulatory measures, guiding banks to continue increasing their lending to small businesses and enlarging the scope of micro and small companies that obtain bank loans,” said Zhang Jinping, deputy director of the financial inclusion affairs department at the CBIRC.
The regulator will push ahead with corporate information integration among different government departments such as the administration for market regulation and tax, so that banks can easily access the operational and financial data of small businesses, in addition to urging banks to improve their internal management mechanisms and to make different evaluation policies for small business lending, said Zhang at a news conference.
The CBIRC will also strengthen communication with the People’s Bank of China, the central bank, as well as financial and taxation administrations, to win favorable policies for small business lending and enhance the relevant risk-sharing mechanisms, she said.
Official data show that as of the end of November, the balance of loans to small and microenterprises with a credit line of no more than 10 million yuan ($1.48 million) reached 9.13 trillion yuan, up by 18.77 percent from the beginning of 2018. The growth rate of this type of loans was 6.89 percentage points higher than that of other loans.
Financing costs of small and micro enterprises with a credit line of no more than 10 million yuan also dropped noticeably. In the fourth quarter of last year, the average lending rate offered by China’s five largest State-owned commercial banks and Postal Savings Bank of China Co Ltd to such companies fell by 1.1 percentage points from that of the first quarter. The average lending rate of the entire banking sector to such companies was more than 7 percent in the first two months of the fourth quarter of 2018, according to the CBIRC.
Apart from ramping up efforts to support small businesses, the regulator also highlighted the importance of implementing policies for the further opening-up of China’s financial market.
“We will carry out research on new measures to strengthen and broaden the scope of this new round of opening-up, allowing professional financial institutions that are specialized in certain areas of business to access the Chinese market and make up for the weak links of the Chinese financial system,” said Xiao Yuanqi, chief risk officer and spokesperson of the CBIRC.