Cuts unleashing long-term capital 
2019-06-14
THE People’s Bank of China has stepped up efforts to increase loan growth to small companies, said Luo Yanfeng, deputy director of the general office at the PBOC.
The central bank has now delivered six reserve requirement ratio cuts since early 2018, with a recent targeted RRR cut for county-level rural commercial banks being announced in May.
The aim is to use structural tools to unleash long-term capital of about 280 billion yuan (US$40.4 billion) to help cash-strained private and small enterprises.
The government also encouraged more corporate and financial bond issuance to support the development of small and medium-sized firms, Luo noted.
Data from the central bank showed that in 2018, up to 59 private companies issued 92 corporate bonds, raising a total of 42.3 billion yuan.
Huang Xiangqian, CEO of Shanghai-based Xinyan AI Technology, said the difficulty in financing small and micro enterprises lies in the fact that they do not have fixed assets as collateral or financial statements that meet the audit requirements for evaluation.
The financial technology startup has facilitated banks’ pre-loan credit evaluation by conducting modeling analysis on the daily operating data of small and micro enterprises.
