14.1 C
New York
Friday, March 24, 2023

China orders banks, insurers to sharply step up lending to private firms

China orders banks, insurers to sharply step up lending to private firms© Reuters. FILE PHOTO: People film the new sign of CBIRC, the newly merged regulatory body, at its office in Beijing

SINGAPORE (Reuters) – China’s banking and insurance regulator said on Monday it had told all of the country’s banks to sharply increase lending to private companies, as policymakers step up support for the slowing economy.

Big state-owned commercial banks should increase outstanding loans to smaller companies by more than 30 percent this year, the China Banking and Regulatory Commission said in an online statement.

The private sector accounts for over half of China’s economic growth and most of its new jobs, but firms have been facing higher borrowing costs and a tougher time obtaining financing due to a multi-year regulatory crackdown on shadow banking, one of their major funding sources.

Chinese banks also believe smaller firms carry higher credit risks and prefer lending to state-backed companies.

Commercial banks are prohibited from discriminatory practices when approving loans for private firms, the regulator said.

Banks should also quicken the disposal of non-performing loans to make room for fresh lending to private firms, it said.

The regulator also said it would allow insurers to provide flexible private company loan insurance products and is studying removing industry restrictions on insurance funds’ ability to make equity investments.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com

Related Articles

Stay Connected

- Advertisement -

Latest Articles

Popular Articles