PBOC will provide more financial services for small and micro businesses

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02:18

Small and micro companies are a vital part of China's economy. The government is sparing no efforts in helping these companies get more financial support and stay in business. And China's central bank announced a number of detailed measures to ease credit access for these smaller firms on Friday in Beijing.

The meeting on promoting financial services for small and micro companies was attended not only by dozens of bank chiefs, but also by 20,000 local central bank staff, financial regulators, economic planners and commercial bank executives, at provincial and county levels via internal television.

Central bank governor Yi Gang said that supporting the small and micro finance sector is a long-term mission, and announced 23 measures on the meeting including increasing micro lending and subsidy quotas, increasing bank credit, reducing taxes and fees and incentivizing banks to lend more to small companies.

The meeting on promoting financial services in Beijing, June 29, 2018. /Photo by CGTN’s Zheng Junfeng

A high bad loan ratio is a major obstacle for preventing banks from lending to small and micro firms, based on Yi, adding that "small and micro companies contribute to 60 percent of GDP, 50 percent of tax revenues, 80 percent of jobs and 80 percent of patent registrations. But they're not favored by banks because they can cause higher bad loan ratios for banks."

"Ninety percent of our 300 outlets are located in communities and rural areas, close to small and micro companies, who represent 99 percent of our customers. Our lending to each customer is only 280,000 yuan (about 42,314 US dollars) on average," said Wang Guanmin, president of Zhejiang Tailong Commercial Bank.

Yi asked financial sector staff not to consider this as a short term campaign, but instead as a commercially sound and sustainable mechanism, that will benefit both banks and small companies. Major bank chiefs promised to prioritize lending to companies with bank credit below five million yuan (around 0.7 million US dollars).