China's Small & Micro Companies: China's central bank to support fin. services for smaller firms

World
Europe

02:38

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. As our Zheng Junfeng reports, China's central bank, just today, announced a number of detailed measures to ease credit access for these smaller firms.

This 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. Its importance is obvious.

YI GANG, GOVERNOR PEOPLE'S BANK OF CHINA "We'd like to help more small companies get more loans, and at the same time reduce the cost of loans and control the bad loan ratio."

Central bank governor Yi Gang announced as many as 23 measures including increasing micro lending and subsidy quotas, increasing bank credit, reducing taxes and fees and incentivizing banks to lend more to small companies.

ZHENG JUNFENG CGTN "Governor Yi Gang says supporting China's small and micro finance sector is a long-term mission, as among 28 million small and micro companies in the country, only 2 million have obtained bank loans."

YI GANG, GOVERNOR PEOPLE'S BANK OF CHINA "Small and micro companies contribute to 60 percent of GDP, 50% of tax revenues, 80% of jobs and 80% of patent registrations. But they're not favored by banks because they can cause higher bad loan ratios for banks."

A high bad loan ratio is a major obstacle for preventing banks from lending to small and micro firms. But a small local bank in Zhejiang has proved they can overcome this challenge with diligence.

WANG GUANMIN, PRESIDENT ZHEJIANG TAILONG COMMERCIAL BANK "90% of our 300 outlets are located in communities and rural areas, close to small and micro companies, who represent 99% of our customers. Our lending to each customer is only 280,000 yuan on average."

During the meeting, major bank chiefs promised to prioritize lending to companies with bank credit below 5 million yuan.

Governor Yi Gang 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. Zheng Junfeng, CGTN, Beijing.