Multi-pronged measures to help ease financing woes of small firms

Source: Xinhua| 2018-11-09 23:15:20|Editor: Liangyu
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BEIJING, Nov. 9 (Xinhua) -- China will make more targeted efforts to boost the financial sector's support for the real economy and tackle financing difficulties for small and micro businesses, the State Council's meeting chaired by Premier Li Keqiang decided on Friday.

The meeting heard a report on delivery of the policies regarding accessible and affordable financing for micro and small businesses.

The Chinese government places high importance on the financial services targeting micro and small businesses. Premier Li Keqiang underlined the importance to smooth the policy transmission channels with targeted measures and encourage financial institutions to raise the share of loans to micro and small companies and cut their financing cost.

The People's Bank of China, China's central bank, has cut the required reserve ratio for commercial banks four times this year, releasing a total liquidity of 2.3 trillion yuan. By the end of September, outstanding loans for micro and small firms totaled over 33 trillion yuan, up by 11.4 percent year on year.

"Government departments are encouraged to take multi-pronged approach, and we must waste no time in helping small firms tackle their liquidity difficulties," Li said, "No loans extended should be willfully withdrawn."

It was pointed out at the Friday meeting that greater efforts will be made to enhance financial services for the private sector, especially micro and small firms.

The financing channels will be widened. The scope of qualified collaterals of the Medium-term Lending Facility will be expanded to cover loans for micro and small firms with a credit quota of up to 10 million yuan per company. Support will be given to more such firms for equity and bond financing.

Financial institutions will be encouraged to make their lending businesses to micro and small firms part of the internal performance evaluation, and allocate corresponding incentive rewards.

The meeting urged on hitting the target of lower lending rate for micro and small firms. Major commercial banks were called upon to work hard to cut their average lending rate by one percentage point in the fourth quarter comparing with the first quarter, and the unnecessary procedures and surcharges in financing will be removed. The meeting also called for effective measures to prevent credit risks.

Financial institutions will be encouraged to take substantive measures in the time to come to further tilt policies in favor of micro and small firms as well as other private companies, Li said.

The government must also provide support in terms of guarantee and taxation, he added.

The meeting also discussed how to better leverage the government-managed guarantee funds to make more financial resources available to micro and small companies. It was decided at the meeting that supporting agricultural and rural development as well as small companies shall be the primary business of all government-managed guarantee and re-guarantee institutions, with a priority given to those micro and small firms as well as entities engaged in agricultural and rural development with a guarantee volume of up to five million yuan per entity.

Financing costs will be lowered. The State Financing Guaranty Fund shall not set its guarantee fee rate higher than that of the provincial institutions. Risks should be shared, with both the State Financing Guaranty Fund and financial institutions shouldering no less than 20 percent of risks in principle.