China’s top financial regulators have just issued a new directive to extend the repayment period for micro-loans provided for poverty alleviation purposes.
On 3 July the China Banking and Insurance Regulatory Commission (CBIRC) in tandem with the Chinese central bank and the Ministry of Finance jointly issued the “Notice Concerning Further Improving Policies in Relation to Poverty Alleviation Small-sum Loans” (关于进一步完善扶贫小额信贷有关政策的通知).
The new Notice outlines a range of six new measures for improving the Chinese micro-loan system for poverty alleviation, chief amongst them an extension on the repayment period to the end of March 2021 for those economically disadvantaged households severely affected by the COVID-19 pandemic.
Poverty-alleviation loan products were first launched by the State Council in 2014 to target economically disadvantaged households in China.
These products were typically for sums under 50,000 yuan with three-year maturities, and were collateral-free loans provided at the benchmark rate.
As of the end of the first quarter of 2020 a total of 10.6781 million poverty-alleviation micro-loans had been provided to economically disadvantaged households in China, for funds of around 444.35 billion yuan in total.