Flex­i­ble poli­cies of­fered to small firms

China Daily (Canada) - - BUSINESS - By JIANG XUEQING in Nan­jing

China CITIC Bank Corp is re­vis­ing its poli­cies to en­cour­age client man­agers to of­fer loans to small busi­nesses, by re­mov­ing their con­cerns for be­ing held re­spon­si­ble for de­fault on loans, as long as they per­form due dili­gence ac­cord­ing to the rules of the bank.

“The fi­nanc­ing dif­fi­cul­ties small and mi­croen­ter­prises face are sys­tem­atic is­sues. Com­pared with the is­suance of loans to large en­ter­prises, the risks of lend­ing to small busi­nesses are higher and will drive the in­crease in banks’ non­per­form­ing loans,” said Yu Jia, gen­eral man­ager of the in­clu­sive fi­nance de­part­ment at the Nan­jing branch of China CITIC Bank.

“Once loans de­fault, the rel­e­vant client man­agers have to devote all their en­ergy to set­tle­ment and col­lec­tion, and their per­sonal in­come is also af­fected,” Yu said in an in­ter­view with China Daily.

“To solve the prob­lem, our bank is in the process of mak­ing re­vi­sions to the ex­ist­ing due dili­gence pol­icy. Our branch is also com­mu­ni­cat­ing with the head of­fice, with the hope that those who make the pol­icy re­gard­ing non­stan­dard­ized fi­nan­cial prod­ucts will take the char­ac­ter­is­tics of small and mi­croen­ter­prises into con­sid­er­a­tion,” she said.

As of Sept 30, the non-per­form­ing loan ra­tio of China CITIC Bank was 1.79 per­cent. The bank al­lowed the NPL ra­tio of its lend­ing to small and mi­croen­ter­prises to be 2 per­cent­age points higher than the over­all ra­tio.

“Banks are seek­ing balance be­tween tight­en­ing risk con­trol and giv­ing stronger credit sup­port to small busi­nesses. It’s re­ally an is­sue to study for banks,” said Yu.

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