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Chinese lenders, insurers must support small and private firms: regulator
[BEIJING] China's financial institutions must support small and private firms, a vice chairman of the country's banking and insurance regulator said on Monday, adding that the regulator will not discriminate between state-owned and private firms.
"We have required banks and insurers to take strong and effective measures to ease funding difficulties facing small and private firms," Zhou Liang, vice chairman of China's Banking and Insurance Regulatory Commission (CBIRC), told a finance forum.
For private firms that face temporary difficulties but still operate normally, financial institutions cannot 'blindly' stop offering loans to them or even recalling loans, Zhou said, adding that the regulator will issue guidelines on supporting private firms this week.
He also poured cold water on market chatter that official policies are giving less importance to the role of the private sector in the economy. That echoed recent comments by vice premier Liu He that talk of the advance of SOEs at the expense of private firms was "one-sided" and "wrong".
With an unprecedented convergence of economic stresses weighing on China's once vibrant private sector this year, some entrepreneurs have begun questioning the effectiveness - and true intent - of Beijing's policies.
A slowing economy and Beijing's crack down on riskier forms of borrowing have pressured the private sector and pushed some firms into distress.
The regulator will encourage financial innovations in an orderly way and take steps to fend off systemic risk, but will "severely" crack down on Ponzi schemes disguised as financial innovations, Zhou said.
Zhou also said China will maintain a prudent stance on monetary policy and ample liquidity.