Asia

Friday, February 14, 2020 - 05:55

MNI POLICY: China Banks to Ease SME NPL Standard: Regulator


BEIJING (MNI) - China's bank regulator has asked banks to ease requirements on non-performing loans (NPLs) and reduce the lending rate charged to small businesses by more than 0.5 percentage point this year, said Li Junfeng, director of the Inclusive Finance Department of the China Banking and Insurance Regulatory Commission.

Loans with modest overdue payments because of the coronavirus outbreak won't count as NPLs or affect small businesses' credit ratings, Li said at a press briefing on Friday. NPL forgiveness can be extended in areas and industries severely affected by the epidemic, Li added.

Here are other takeaways by Li and Peng Lifeng, deputy director of the Financial Markets at the People's Bank of China.

- The big-five banks should show leadership, lowering the lending rates to as low as 4.7%, even lower for virus-affected regions, said Li.

- Banks should halt interest payments for small companies for a period of time, said Li.

- Banks should proactively roll over loans set to mature at the end of June 2020 for small companies to safeguard their funding needs, said Li.

- Local government financing guarantee institutions should expand the scale of guarantees by 10 times, and gradually lowering fees to less than 1%, said Peng.

- The PBOC has received applications for a CNY300 billion special re-loaning from thousands of key companies. These preferential loans are being quickly issued carrying rates 2-3.15%, said Peng.

- Investors are rational and have confidence over China's growth, with recent market activity seeing the impact of the epidemic is temporary. The central bank will respond to risks in a timely fashion to keep markets stable, Peng said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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