To PBC Shanghai Head Office, branches, operations offices, and central sub-branches in capital cities of provinces (autonomous regions) and sub-provincial cities; CBIRC bureaus; MOF departments (bureaus), development and reform commissions, administrations of small and medium-sized enterprises (SMEs) in all provinces, autonomous regions, municipalities directly under the central government, municipalities with independent planning status and the Xinjiang Production and Construction Corps; China Development Bank, all policy banks, state-owned commercial banks and joint-stock commercial banks, and Postal Savings Bank of China:
In order to thoroughly implement the decisions and arrangements made by the Central Committee of the Communist Party of China (CPC) and the State Council on coordinating COVID-19 pandemic containment and the economic and social development, and to follow the requirements laid out in the Government Work Report to strengthen policy support for stabilizing businesses and securing employment, the PBC, jointly with the Ministry of Finance (MOF), applies RMB400 billion special quotas of central bank lending, and with innovation of monetary policy tools, purchases a proportion of inclusive micro and small businesses (MSB) credits issued by qualified locally incorporated banking financial institutions, in a bid to encourage banks to expand credit issuance to MSBs and support more MSBs to access unsecured credit support. Upon the approval of the State Council, the relevant arrangements are hereby notified as follows:
I. Support policy for purchasing inclusive MSB credits
Starting from June 1, 2020, the PBC will, through monetary policy instruments, purchase inclusive MSB credits newly issued by qualified locally incorporated banking financial institutions on a quarterly basis. The qualified locally incorporated banking financial institutions include city commercial banks, rural commercial banks, rural cooperative banks, village banks, rural credit cooperatives and private banks that are rated from level 1 to 5 in the PBC’s latest rating of financial institutions. The credits to be purchased amount to 40 percent of inclusive MSB credits newly issued by the qualified locally incorporated banking financial institutions between March 1, 2020 and December 31, 2020 with maturities of six months or above.
After purchasing the aforementioned credits through monetary policy instruments, the PBC will entrust the lending banks with credit management. For the part of credits that are purchased by the PBC, the lending banks shall collect interest of the credits and bear losses if such credits turn to be bad loans. The lending banks shall repay the funds at the original value after a year from the date of purchase.
II. Step up the issuance of inclusive MSB credits
Banking financial institutions shall increase the allocation of credit resources to MSBs, improve the risk assessment mechanism, focus particularly on examining the first source of repayment, reduce reliance on collateral, enable more MSBs to access unsecured credits, so as to ensure a significant rise in the proportion of inclusive MSB credits in 2020.
Banking financial institutions shall proactively leverage fintech such as big data and cloud computing to integrate internal and external credit information, and strengthen the assessment and management of MSB credit risks. Measures should be taken, according to the financing demands and characteristics of MSBs, to diversify the system of credit products and encourage banks to increase medium and long-term credit lines. Credit approval powers shall be properly handed down to lower levels, so as to improve the efficiency of MSB credit issuance.
Locally incorporated banking financial institutions that obtain the support shall establish growth targets for inclusive MSB credits, ensure MSBs’ benefits from policy dividends and lower the interest rates of credits with great efforts. Special records for inclusive MSB credits issued on or after March 1, 2020 shall be established and promptly reported to the PBC branches and local offices of CBIRC with authentic, accurate and complete data. Pre-approval evaluation and post-issuance management shall be carried out effectively, and enterprises may be required to provide a letter of commitment to stabilizing employment. During the term of loans, the enterprises should maintain basically stable employee headcounts. Credit risks should be well handled to conscientiously prevent the accumulation of financial risks.
III. Enhance cooperation, ensure fulfillment of responsibilities, and reinforce policy implementation
PBC branches, CBIRC local offices and the authorities of finance, development and reform, as well as industry and information technology shall improve cooperation and coordination, enhance policy transmission and ensure thoroughly implementation, so as to support the normal operations and stable employment of MSBs. The capabilities of banking financial institutions in serving MSBs with credits within their jurisdictions should be boosted through various means such as launches of special credit actions.
PBC branches shall jointly work with CBIRC local offices to effectively monitor and assess the credit issuance by banking financial institutions within their jurisdictions, guard against moral hazards and financial risks in the implementation of policies, promote a significant rise in the proportion of inclusive MSB credits, and ensure solid effects of the policies.
The Notice takes effect on the date of publication.
The People’s Bank of China
China Banking and Insurance Regulatory Commission
Ministry of Finance
National Development and Reform Commission
Ministry of Industry and Information Technology
June 1, 2020
