CBIRC Calls for Chinese Banking Sector to Make More Unsecured Loans

The China Banking and Insurance Regulatory Commission (CBIRC) is pushing for the banking sector to increase its lending private enterprise, as part of efforts to boost the economy.

Wang Zhaoxing (王兆星), vice chair of CBIRC, said that regulator is encouraging banking sector financial institutions to make even more unsecured or uncollateralised loans.

According to Wang many small and micro-enterprises have either pledged assets such as real estate or do not have any assets to pledge for financing purposes, which has made it extremely difficult for them to obtain credit.

For this reason CBIRC wants banks to “reduce their excessive reliance upon collateral and guarantees to the greatest extent possible when making loans to private enterprise and small and micro-enterprises.”

“CBIRC encourages and guides banking sector financial institutions to constantly reduce their reliance upon collateral and guarantees, on the foundation of strengthening risk identification and decision-making and raising risk management and control levels.

“[Banks should] make more unsecured and uncollaralised loans based on the strong credit records and market competitiveness of companies.”

Wang made the remarks at a press conference held by the State Council Information Office on the afternoon of 30 October, concerning the banking and insurance sectors’ servicing of private enterprise and small and micro-enterprise.

The CBIRC vice-chair outlined four measures for supporting the development of private enterprise in China:

  1. Provide more regulatory and policy encouragement to banking and insurance institutions to actively and positively service the private economy, and guide banking sector institutions to improve and expand their support for private enterprise and small and micro-enterprises;
  2. Guide banking and insurance institutions to make the private economy and small and micro-enterprises a greater priority;
  3. Further improve internal assessment, testing and incentive systems, and provide more incentives for better service for private enterprises and small and micro-enterprises;
  4. Expand credit preferences, and constantly increase the share of new loans made to private enterprises and small and micro-enterprises.

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