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Small enterprises get 27.9% of total loans

Updated: 2011-11-08 09:35

(Xinhua)

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BEIJING - China has implemented a slew of measures to guide banks to loan more to small and micro-sized enterprises, and 27.9 percent of all outstanding loans by September went to those companies, the country's banking regulator said Monday.

The China Banking Regulatory Commission (CBRC) said that outstanding loans made to small and micro-sized companies totaled 14.75 trillion yuan ($2.33 trillion) by the end of September.

Shang Fulin, the newly-appointed chairman of the CBRC, said Monday that the commission had made a series of policies to support the development of small and micro-sized companies in recent years.

"Effective policy guidance has guaranteed the sustainability of banking services provided to small and micro-sized companies," Shang said.

In 2008, the commission made it clear that the growth of loans to small firms should not be slower than that of total lending, and the growth should be higher than the previous year's growth.

The latest data from the CBRC shows that total outstanding loans to small firms as of the end of September stood at 10.1 trillion yuan, representing a growth of 24.3 percent from a year earlier, much faster than the 8.4 percent growth for all outstanding loans.

Loans made to micro-sized businesses and individual businesses reached 4.65 trillion yuan by September, accounting for 8.8 percent of all loans.

Since the beginning of this year, the CBRC has stepped up reforms in terms of differentiated supervision of bank lending to small businesses.

At the end of May, the CBRC issued a circular on further improving banking services to small companies, imposing a lower non-performing loan (NPL) requirement for small firms to provide better access to financing for those firms.

The circular also said that banks whose outstanding loans to small companies meet a certain proportion of their total loans will be given priority to issue bonds earmarked for granting loans to small businesses.

China's small companies have always been at a disadvantage in raising funds, especially after the country strived to reduce new lending and mop up liquidity this year in an effort to curb asset bubbles and inflation.

The central bank has raised interest rates three times this year and hiked the reserve requirement ratio for commercial banks six times to ease inflation pressure and tighten liquidity.

To help ease the capital crunch for small firms, the CBRC revealed a detailed plan in October to encourage financial support for small- and micro-sized firms as part of a supplementary notice.

The supplementary notice ordered commercial banks to give more support to enterprises that borrow less than 5 million yuan and increase tolerance for non-performing loans to small- and micro-sized firms.

The notice also set detailed rules for the establishment of financial institutions that serve small businesses and encouraged banks to create financial instruments to support the development of small high-tech enterprises.

Guo Tianyong, a professor at the Central University of Finance and Economics, said the supplementary notice will encourage banks to lend more to small firms through differentiated supervision and concrete incentives.

"Its implementation is conducive to optimizing banks' credit structure and improving their capacity to provide financial services to small- and micro-sized businesses," Guo said.

Late Tuesday, China carried out major tax cuts designed to benefit small- and micro-sized firms, raising the threshold for levying the business tax to 5,000-20,000 yuan from the previous 1,000-5,000 yuan in terms of total sales revenues.

 

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