Li says loans to SMEs should not be ‘wil­fully with­drawn’

Gulf Times Business - - BUSINESS -

China’s premier said loans to small firms should not be “wil­fully with­drawn,” and China should help small firms tackle their liq­uid­ity dif­fi­cul­ties, the official Xin­hua news agency re­ported late on Fri­day.

His com­ments are the lat­est from China’s lead­er­ship about ef­forts to prop up small and medium en­ter­prises (SMEs), which are flail­ing in the face of a wider clam­p­down on riskier credit, a slow­down in eco­nomic growth and the es­ca­lat­ing trade war be­tween the United States and China.

“Govern­ment de­part­ments are en­cour­aged to take mul­ti­pronged ap­proach,” Chi­nese Premier Li Ke­qiang said dur­ing a cabi­net meet­ing on Fri­day, Xin­hua said.

“No loans extended should be wil­fully with­drawn,” he said.

China will adopt more tar­geted mea­sures to boost the fi­nan­cial sec­tor’s sup­port for the real econ­omy and tackle fi­nanc­ing dif­fi­cul­ties for small and mi­cro busi­nesses, the State Coun­cil’s meet­ing, chaired by Li, de­cided.

Li fo­cused on the im­por­tance of clear meth­ods to im­ple­ment the as­sis­tance for SMEs and mea­sures to en­cour­age fi­nan­cial in­sti­tu­tions to in­crease their loans to SMEs and cut their fi­nanc­ing costs, said Xin­hua.

Ma­jor com­mer­cial banks were called upon to cut their aver­age lend­ing rate for SMEs by 1 per­cent­age point in the fourth quar­ter, com­pared with the first quar­ter, and re­move un­nec­es­sary pro­ce­dures and sur­charges for fi­nanc­ing, Xin­hua said.

The Peo­ple’s Bank of China, the cen­tral bank, has cut the re­quired re­serve ra­tio for com­mer­cial banks four times this year, re­leas­ing 2.3tn yuan ($330.68bn).

By the end of Septem­ber, out­stand­ing loans for mi­cro and small firms hit over 33tn yuan, up 11.4% on-year.

Col­lat­eral that qual­i­fies for use in the medium-term lend­ing fa­cil­ity will be ex­panded to cover loans for SMEs with a credit quota of up to 10mn yuan per com­pany, added Xin­hua.

Sup­port will be given to firms for eq­uity and bond fi­nanc­ing.

Fi­nan­cial in­sti­tu­tions will be en­cour­aged to make SME lend­ing part of their in­ter­nal per­for­mance eval­u­a­tions and pro­vide in­cen­tives to do so, the Xin­hua re­port said.

The meet­ing also dis­cussed ways to use govern­ment-man­aged guar­an­tee funds to make more fi­nan­cial re­sources avail­able to SMEs.

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