The People’s Bank of China (PBOC) has extended use of “direct reach” instruments to drive financial inclusion in the Chinese economy in 2022.
PBOC announced on 1 January that starting from the same date it would extend use of financial inclusion micro-and-small enterprise loan extension support instruments (普惠小微企业贷款延期支持工具) and the financial inclusion micro-and-small enterprise loan support plan (普惠小微企业信用贷款支持计划).
PBOC said that it would “guide local legal person banks in independently making decisions and independently bearing risk in expanding financial inclusion micro-and-small loans, actively excavating new financing demand, and expanding the vigour of support for micro-and-small enterprises.”
Domestic observers say the continuation of the direct-reach instruments marks both an expansion and upgrade of prior policies.
During the period from 2022 to the end of June 2023 PBOC will provide funds to local legal person banks at a rate of 1% of the increase in their financial inclusion micro-and-small loan balance, and encourage them to make ongoing increases to micro-loans on a seasonal basis.