BEIJING, Dec. 6 (Chinese media) -- Smaller enterprises, which
have long had trouble getting finance, are expected to get better access to
loans as new institutions will be set up specifically for that purpose.
The China Banking Regulatory Commission (
offer better financial support for smaller enterprises to avoid widespread
bankruptcies and massive lay-offs, because such companies are less proficient at
handling risks, especially amid the financial turmoil that is now affecting
China.
These institutions will be established by commercial
banks as a quasi-corporate body or subsidiary that will run independently, the
CBRC said.
The commission said smaller enterprises are
identified as those with an authorized credit of 5 million yuan (about 720,000
U.S. dollars), assets of less than 10 million yuan or annual sales of less than
30 million yuan. However, these standards only applied to document filing, and
banks could set other definitions.
Large policy banks and national commercial banks were
targeted in the guidelines issued by the CBRC, as such large banks are reluctant
to lend to smaller enterprises, which they consider more risky.
The commission said the independent institutions
could have a system for the provision of bad loans, separate from the parent
banks, and work out a mechanism to speed up writedowns of bad loans, leaving
these large banks unimpaired by higher risks.
Amid the global financial crisis, China's small and
medium-sized enterprises, largely labor-intensive and vulnerable to fluctuations
in domestic and external demand, are affected most.
In the first half of 2008, 67,000 such companies,
each with a business volume exceeding 5 million yuan, closed and laid off more
than 20 million employees, said the National Development and Reform Commission.
That figure doesn't include service industry firms or
small companies with sales of less than 5 million yuan, as there are no
authoritative figures available on those categories.
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