China to improve inclusive loans to micro and small businesses

China will continuously improve financial service supplies for micro and small businesses this year, steadily increase bank credit, optimize credit structure and promote a reduction of comprehensive financing costs, said the China Banking and Insurance Regulatory Commission on Friday.

The regulator has recently issued a notice, saying that the banking sector should continue to achieve increases in the growth rate of inclusive loans to micro and small businesses and increases in the number of such businesses that obtained inclusive loans.

Banks should strive to continuously increase the proportion of unsecured loans to total inclusive loans this year. In addition, for a large State-owned commercial lender or a national joint-stock commercial lender, the number of its new micro and small business clients that have obtained loans from the bank for the first time are projected to be greater than that of the previous year.

The CBIRC also urged the banking sector to work hard so that the overall interest rate of new inclusive loans to micro and small businesses for the full year will see a slight decline, compared with the rate in 2021.

Banks are expected to ramp up medium and long-term credit issuance to micro and small businesses in the advanced manufacturing sector and strategic emerging industries, apart from supporting the medium and long-term demand for funds in the areas of equipment upgrade, technological innovation and green transitions.

The regulator also encouraged banks to partner with external institutional investors in exploration of a new model to serve small tech startups by combining loans with direct investments.

For those micro and small businesses that face temporary difficulties but still have the intention to repay loans and the ability to create jobs, banks should negotiate with them and decide how they will make loan principal and interest payments according to the principle of market orientation.

In addition, the CBIRC said all levels of regulators and banking and insurance institutions should push for the construction of credit information-sharing mechanisms and financing service platforms as well as promote the expansion of the scope of information sharing in an orderly manner.