Chinese Central Bank Issues Directive to Drive Growth in Financial Services for Small Businesses

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The People’s Bank of China (PBOC) has issued a fresh directive outlining a slew of measures to expand financial services for Chinese small businesses.

On 5 July PBOC announced the release of the “Notice Concerning the In-depth Undertaking of Projects to Raise Micro, Small and Medium-sized Enterprise Financial Services Capability” (关于深入开展中小微企业金融服务能力提升工程的通知).

According to PBOC the goal of the Notice is to “further raise the ability of banking sector financial institutions to provide financial services to micro, small and medium-sized enterprises (MSME); strengthen the development of long-term effective mechanisms for making banks ready, willing and able to make loans, and drive finance to better service the real economy during a new phase of development.”

The Notice stresses the need for “all banking sector financial institutions to embed loan market interest rate quotes in internal pricing and transmission phases; increase loan differentiation, refine pricing levels, and strengthen the management and control of liabilities costs.”

The Notice further calls for Chinese banks to:

  • Expand the provision of loans to MSME’s.
  • Optimize lending products and services for individual industrial and commercial registrants.
  • Expand the coverage of financial inclusion services.
  • Expand investment in inclusive fintech.
  • Engage in the innovation of unique lending products.
  • Develop and improve lending products such as non-principal repayment rollover loans and “borrow and repay as you go” loans.
  • Raise the convenience of loan usage.
  • Reduce the overall financing costs for MSME’s.
  • Make use of PBOC’s Credit Reference Center to provide supply chain financial support to MSME’s.

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