China Regs To Assess Banks’ SMB Financing Efforts

With the newest effort to direct more funding its most susceptible business vertical, China’s banking regulator said it would begin to watch the level of support lenders are providing to smaller companies that are encountering difficulties. Banks providing loans to small and medium-sized businesses (SMBs) would be a part of a yearly assessment that the China Banking and Insurance Regulatory Commission (CBIRC) will supervise, Reuters reported.

A guideline impels commercial lenders to provide SMBs with loans at a rate that is not below the lending growth rate in the industry. It also detailed different goals to command the bad loan ratio on SMB loans and lending rates. The regulator, for its part, will put reforms into place or make supervision stricter for lenders that are not up to par on financing SMBs, among other areas.

Regulators have been aiming to send more financing to smaller and private firms at reasonable rates for a long time. The acute economic impact from COVID-19 has made those activities more pressing.

However, efforts on the part of Beijing to put over 800 billion yuan into first through inexpensive bank loans to mitigate the economic impact of the coronavirus have led to particular challenges. Those difficulties encompass different lending criteria and unclear eligibility criteria.

In separate news, SMB lending platform OneConnect had rolled out a new portal to assist with SMB lending in the province of Guangdong per news in January. The firm had introduced the platform with the help of the province along with its governor.

The platform, for its part, makes credit profiles for local SMBs to link them to trade finance, intellectual property finance and supply chain finance, while mitigating risk for banks.

At the time, news surfaced that the platform has access to information from 26 government departments to create its small business credit profiles and has the ability to assess the risk of over 11 million firms.