A slew of China’s top financial and economic authorities have jointly issued a new directive calling for domestic banks to extend the repayment period for loans to micro, small and medium enterprises (MSME) amidst efforts to contain the impacts of the novel coronavirus.
On 2 March the Chinese central bank issued the “China Banking and Insurance Regulatory Commission, People’s Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology and Ministry of Finance Notice on Temporarily Extending Principal and Interest Repayments on Loans to Micro, Small and Medium Enterprises”(银保监会 人民银行 发展改革委 工业和信息化部 财政部关于对中小微企业贷款实施临时性延期还本付息的通知) via its official WeChat account.
The Notice calls for Chinese banks to provide certain MSME with temporary extensions on loan repayments for loans that mature after 25 January 2020, with a maximum extension period of until 30 June 2020.
The Notice said that the extensions will be made based on applications submitted by MSME’s, and determined on the basis to which tier operations have been impacted by the coronavirus.
Chinese banks are also permitted to negotiate for separate extension arrangements for those MSME that are very heavily impacted by the coronavirus, whose recovery cycle is longer and who’s redevelopment prospects are considered to be “outstanding.”