China.org.cn | October 18, 2024
Beijing Youth Daily:
Concerning small and micro enterprises, we have noticed that recently many support policies have been introduced for the financing of small and micro enterprises, and financial institutions have enhanced their efforts in providing services. The financing for small and micro enterprises has seen an increase in volume, an expansion of coverage and stable pricing. However, some of them have reported that they still face obstacles. Could you please share if the NFRA has any targeted measures in this regard? Thank you.
Li Yunze:
Thank you for your question. Small and micro enterprises are connected to numerous households and are an important force in stabilizing the economy, promoting employment and improving people's livelihoods. In recent years, we have worked with the PBC to continuously strengthen policy guidance as well as coordinate efforts from diverse parties to improve the financial services for small and micro enterprises. By the end of August this year, the balance of inclusive small and micro enterprise loans nationwide had reached 31.9 trillion yuan, a fourfold increase compared to the end of 2017, with the average interest rate decreasing by 3.5 percentage points. To further address the financial obstacles faced by small and micro enterprises, the NFRA will take two main measures.
First, we will collaborate with the National Development and Reform Commission to establish a coordination mechanism for supporting small and micro enterprises in obtaining financing. This mechanism draws on the experience from the earlier coordination mechanism for real estate financing by setting up dedicated working groups at district and county levels. These groups will work on two fronts: On one hand, they will engage with companies, conducting extensive visits to thoroughly understand the operational status and actual difficulties of small and micro enterprises, focusing on comprehensively assessing their financing needs. On the other hand, they will work with banks, recommending small and micro enterprises that comply with laws and regulations, have genuine financing needs and maintain good credit records. Banks should respond promptly and, in principle, complete credit approvals within one month to ensure that loan funds directly reach small and micro enterprises, truly bridging the "last mile" in delivering financial support.
Second, we will optimize the policy for loan renewals without repayment of principal. In 2014, the former China Banking Regulatory Commission issued a loan renewal policy for small and micro enterprises, commonly known as "Document No. 36." This policy stipulates that eligible small and micro enterprises with ongoing financing needs can apply for loan renewals when their loans mature. This means they can secure continued financing without repaying the principal upon loan maturity, a service known as "loan renewals without principal repayment." This policy has been well-received by small and micro enterprises and has played a positive role in facilitating their financing. We will further optimize the policy in three aspects.
First, we will expand the scope of the renewal policy from a limited number of small and micro enterprises to include all such businesses. Any eligible small or micro enterprise with genuine financing needs and facing financial difficulties after loan maturity can apply for loan renewal support.
Second, we will temporarily extend the renewal policy to medium-sized enterprises for a three-year period. Specifically, working capital loans for medium-sized enterprises maturing before Sept. 30, 2027, can follow the renewal policy applicable to small and micro enterprises.
Third, we will adjust risk classification standards. Loans renewed for companies that operate legally, maintain continuous operations and have good credit records will not be downgraded in risk classification solely due to renewal.
To ensure effective implementation of credit support policies for small, micro and medium-sized enterprises, especially to address concerns among grassroots loan officers about granting loans to these businesses, the NFRA recently introduced a due diligence liability exemption system for inclusive financing. This system specifies situations where loan officers can be exempt from liability if they have performed due diligence, aiming to fully encourage their enthusiasm and initiative and establish a long-term mechanism where officers are confident, willing, able and proficient in providing loans.
That's all I have for now. Thank you.