The Business Times

China to encourage banks to lend more to small firms

Published Mon, Jul 5, 2021 · 07:54 PM

[BEIJING] China's central bank said on Monday it would encourage banks to lend more to small firms by stabilising their funding costs and allowing them to tolerate more bad loans.

China aims to build a long-term mechanism to make banks "dare, willing and able" to lend more to small firms, the central bank said in a statement on its website.

China will encourage banks to reasonably set deposit rates to stabilise funding costs, and unleash potential from previous loan prime rate (LPR) reforms to consolidate falls in real lending rates for small firms, the central bank said.

Last month, an industry body said China's reforms to the way banks calculate deposit rates would help ease pressure on banks'funding costs, although the impact on lenders and depositors would be limited.

Chinese authorities have unveiled a raft of policy measures since early last year to support small businesses but have been hit harder by the Covid-19 outbreak.

China would increase its tolerance for non-performing loans for small businesses, the central bank said.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

The central bank will continue to use re-lending, re-discount tools to guide banks to lend more to small firms, while encouraging small and medium-sized banks to issue special bonds for financing small firms.

REUTERS

KEYWORDS IN THIS ARTICLE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

Banking & Finance

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here