State Council Flags Raft of Financial Inclusion Measures Following COVID-19, Another Reduction in Reserve Ratio for Smaller Banks

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China’s State Council has flagged a raft of further measures to help the financial system and economy weather the impacts of the COVID-19 outbreak.

A regular meeting of the State Council held on 31 March confirmed that it would “further strengthen financial inclusion support measures for micro, small and medium enterprises,” with measures including:

  • Further implementing targeted required reserve ratio (RRR) cuts for small and medium-sized banks,
  • A one trillion yuan increase in the re-loan re-discount quota for small and medium-sized banks,
  • Guiding net financing via credit-category bonds that is one trillion yuan greater than the previous year, to expand low-cost financing channels for private enterprise and small and medium enterprises
  • Supporting financial institutions in the issue of 300 billion yuan in micro and small financing bonds to be used for micro and small loans,
  • Encouraging the development of supply chain financial products,
  • Spurring micro, small and medium enterprises to obtain full year accounts receivable financing of 800 billion yuan,
  • Improving mechanisms for the sharing of financial risk.

On 16 March China implemented a tar­geted RRR cut of 0.5 to one per­cent­age points for banks that satisfied requirements, while qual­i­fied joint-stock banks also en­joyed an ad­di­tional tar­geted re­duc­tion of one per­cent­age point to sup­port the is­suance of fi­nan­cial in­clu­sion loans. 

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