The Chinese banking regulator has set ambitious new targets for growth in financial inclusion loans made by big state-owned lenders to small businesses.
The China Banking and Insurance Regulatory Commission (CBIRC) recently issued an order calling for five big state-owned banks to achieve at least 30% full year growth in financial inclusion micro and small-enterprise loans, according to sources speaking to China Securities Net.
The Notice called for the number of micro and small-enterprise financial inclusion first time borrowers in 2021 to exceed last year, and for large-scale banks to include this figure as a metric in internal performance assessments.
CBIRC said that banks should pursue “improvements to pricing mechanisms” and keep interest rates for micro-and-small enterprise financing at “rational levels” by making reference to the loan prime rate.
CRBIC also warned financial institutions that there would be a strict prohibition on “arbitrage” involving micro and small-enterprise loans, and related funds covertly entering capital markets, government financing platforms or the real estate market.