China SCIO | April 7, 2020
China News Service:
Affected by the pandemic, many micro, small and medium-sized enterprises are facing difficulties in operation and limited sources of capital chain. What measures will the CBIRC take to support them? Thank you.
Zhou Liang:
Since the outbreak, many micro, small and medium-sized enterprises have undergone difficult times. One of the prominent problems is the limited sources of capital chain. We have taken a series of timely measures to ease their financial pressure. According to statistics, by the end of February, the balance of inclusive loans to micro and small enterprises was 5.55 trillion yuan, up 31.8 percent year on year, for a considerable growth. The average interest rate on loans was 5.22 percent, down 0.22 percentage point from the previous year. Among them, the average interest rate of five major banks' inclusive loans to micro and small businesses was 4.4 percent, down 0.3 percentage point from the previous year. We have focused mainly on the following areas:
First, we have worked to increase credit to micro and small enterprises, weigh loans toward first-time borrowers, improve the quality of financial services and reduce their borrowing costs. We want to ensure that the growth of loans for micro and small enterprises with a credit quota of under 10 million yuan per company is not lower than the growth rate of any other loans, and that the number of accounts with a loan balance is not lower than the level at the beginning of 2020. Five major banks will strive for a year-on-year increase of 30 percent for inclusive loans to micro and small enterprises in the first half of the year. We will focus on increasing the proportion of first loans made to new clients of these enterprises and we will appropriately increase the proportion of credit loans and loan renewals to further reduce their financing costs.
Second, we have implemented the provisional deferment policy for both principal repayment and interest payment. The introduction of this policy was welcomed by the vast number of micro, small and medium-sized enterprises. The provisional deferred policy for principal repayment and interest payment will exempt default interest without adjusting clients' loan category or credit record. All of this has created conditions for enterprises to tide over difficulties. According to incomplete statistics, the principal and interest of micro, small and medium-sized enterprises' loans that are now subject to deferment policy amount to 700 billion yuan, and the majority of these enterprises and self-employed business owners are enjoying this preferential policy.
Third, we have increased credit support to micro, small and medium-sized enterprises in industries and regions severely hit by the pandemic. For industries such as wholesale and retail, hospitality and catering, logistics and transportation, and cultural tourism, which have been severely hit by the COVID-19 outbreak, we urged banks to not rashly withdraw, cut off or defer lending. Financial institutions were encouraged to reduce the loan interest rates so as to benefit enterprises. At the same time, by providing more credit loans and medium- and long-term loans, we wanted to support enterprises to resume work and production as soon as possible. We have also made targeted arrangements for Hubei Province. We will strive to lower the comprehensive financing cost in 2020 by over 1 percentage point from last year for small and micro enterprises in Hubei.
Fourth, we have given full play to the role of non-commercial banks in counter-cyclical adjustment and support the development of private, micro and small enterprises. Non-commercial banks are encouraged to provide low-cost funds to small and medium-sized banks, allowing them to extend relending funds to private, micro and small enterprises at favorable interest rates no higher than the interest rates of local inclusive loans. At present, the balance of relending funds has reached 180 billion yuan, up 17 percent from the beginning of the year. We will step up our efforts in the future.
Fifth, we have strengthened the utilization of Fintech (financial technology) to provide precise and convenient services for micro, small and medium-sized enterprises. We have encouraged the use of technologies such as big data and cloud computing to provide both online and offline services to enable these enterprises to obtain financial services without leaving their homes through the Internet, mobile phones and telephones.
Sixth, we have effectively reduced the financing costs of enterprises. We will further clear bank fees, crack down on irregularities, such as the practice of taking deposit as the premise condition for the approval and issuing of loans, and encourage insurance institutions to provide financing and credit to micro, small and medium-sized enterprises. In addition, Mr. Xu has just talked about lowering the fees on financial guarantees and intermediary services, while the PBC has put forward requirements to ensure that the dividends of the policies go to small and micro businesses and are not withheld.
In short, sound economic growth will ensure the stability of finance, and good performance by enterprises will boost the financial development of China. Micro, small and medium-sized enterprises are the main force for stabilizing employment. This concerns the vital interests of the people and was greatly affected by the pandemic. All parties should work together to help them tide over the difficulties. We urge banks and insurance institutions to put themselves in these enterprises' shoes and provide timely assistance to them, as well as honestly implement the policies of the CPC Central Committee and the State Council. Thank you.