As service centers for first-time borrowers were established in different regions, and banks optimized their financing services, China has strengthened financing support for small businesses.
Commercial banks' services for first-time borrowers will be scored in a performance evaluation system, a new measure to encourage banks to support small and micro enterprises, according to a document released by the China Banking and Insurance Regulatory Commission (CBIRC) recently.
Evaluating banks' services for first-time borrowers is more meaningful than merely adding leverage on existing borrowers, Zeng Gang, deputy director of the National Institution for Finance and Development, a Chinese finance think tank, said in an interview with the Financial News.
First-time borrowers refer to enterprise clients who do not have loan records in the credit record system of the People's Bank of China (PBOC). To further relieve financing pressure on small businesses hit by COVID-19 and bolster the real economy, many places have made preliminary progress in raising the ratio of first-time borrowers to total small business clients.
In April, a service center for first-time borrowers was established in Beijing, with 22 banks having settled here, helping to reduce financing processes and lower financing costs for enterprises.
Li Mingxiao, director of the CBIRC's Beijing Office, said that banks in Beijing have granted more than 80 billion yuan (about US$11.43 billion) worth of loans to over 34,000 first-time borrowers this year.
Besides Beijing, Chongqing and Gansu have also opened service centers to help small businesses acquire first-time loans. At the service center of Chongqing, firms can enjoy financial services such as policy consulting, loan product introduction, and loan applications.
In east China's Zhejiang Province, the Hangzhou Central Sub-branch of the PBOC has set up a goal to improve the ratio of first-time borrowers to total small business clients to no less than 15 percent by the end of 2020.
Li Junfeng, an official with the CBIRC said in April that small and micro enterprises, as well as individual business owners who had outstanding loans in commercial banks, were over 22 million, accounting for 20 percent of the total in this pool and leaving much room for improvement.
With asymmetric information being one of the obstacles for the expansion of first-time loans, it is key to ensure banks and enterprises can communicate with each other based on financial statements under unified standards, said an official with the CBIRC's Zhejiang Office.
To enhance information services for enterprises, the Hangzhou Central Sub-branch of the PBOC has collected information on key enterprises' financing demands through provincial-level government departments, and relayed it to appropriate financial institutions.
As the Financial News reported, 150 million pieces of information, involving over 2.43 million enterprises, have been collected by the sub-branch.
Noting that wide support has created a more favorable environment for the development of first-time loans, experts say the banking sector should further change their way of thinking to use fintech to enhance risk management capabilities and efficiencies, enabling first-time loans to become more sustainable in business.
The Agricultural Bank of China's Zhejiang branch has explored technologies such as biometric information, e-signatures, and optical character recognition to improve enterprises' online experience. By the end of June, the balance of the bank's online loans reached 135.2 billion yuan.
"Innovation is essential for banks to establish channels to approach more clients and secure risk control," said Zeng, adding that financial institutions can leverage the advantages of internet channels to gradually solve financing challenges faced by small businesses.
