Lenders should make loans more readily available at better terms
China will do more to ensure that its smaller enterprises enjoy ready access to affordable credit, a State Council executive meeting chaired by Premier Li Keqiang decided on Wednesday.
Financial institutions will be incentivized to be more supportive of smaller businesses, and the regulatory approach and evaluation format for these institutions will be improved to ensure timely financing is available for targeted businesses, policymakers decided.
"There is now a pressing need for the financial sector to serve the real economy, micro and small businesses in particular, as these businesses play a critical role in creating jobs," Li said.
Making financing more accessible and affordable for small business has been included in the agenda of the State Council's executive meeting several times since the start of this year.
Application requirements for such lending facilities were eased, new lending formats were introduced and the scope of qualified collateral widened.
"There have been some new developments internally and externally this year, while financing difficulties facing small businesses are acutely felt," Li said. "It is imperative to smooth the transmission mechanism of financial policies and keep our measures well-calibrated to ensure that liquidity remains reasonably ample."
The country will stick with prudent monetary policies and will refrain from resorting to a deluge of strong stimulus policies, it was stressed at the meeting.
The government will work to improve the transmission mechanism of its monetary and credit policies to ensure full delivery of measures aimed at lowering financing costs for small business, and encourage financing institutions to grant more credit to such enterprises at lower costs.
More financing support will be given to small businesses, including setting proper time frames and options for loan repayments, and increasing the share of medium-and long-term loans as appropriate.
An incentive mechanism linking the performance assessment of financial institutions with the amount of loans they issue to small businesses will be established, and a more accommodating approach will be exercised over the loan-to-deposit ratios of financial institutions to motivate them to better serve small businesses.
Regulatory and evaluation mechanisms will be improved. An indicator for small business loans will be added to the evaluation mechanism. Such irregularities as linking loans with deposits and arbitrarily requiring the purchase of financial products will be resolutely prohibited.
All policy incentives introduced must be earnestly implemented to see desired results delivered as early as possible, and it is important to put equal emphasis on promoting development and staving off risks, and help ensure a better economic performance for the remainder of the year, Li stressed.