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China to introduce strong financial measures to help smaller firms tide over difficulties

2020-02-26 13:34:49 xinhua

China will roll out a set of strong financial policies, including encouraging financial institutions to provisionally defer loan payments and increasing lending at concessional rates for micro-, small- and medium-sized enterprises, as part of effort to help them overcome temporary difficulties.

These decisions were made on Tuesday at the State Council's executive meeting chaired by Premier Li Keqiang.

"Statistics show that only a small percentage of micro-, small- and medium-sized businesses have restarted operation. As these firms are major job providers, we must give them greater support to facilitate their early restart of work and tide them over the tough time. Such support can be further intensified for businesses in Hubei Province," Li said.

The meeting decided on additional financial measures in line with market principles and the law to support micro-, small- and medium-sized companies in restarting operation.

For eligible micro-, small- and medium-sized firms, including household businesses, with temporary liquidity difficulty, financial institutions will be encouraged to provisionally defer their loan principal repayments. Their interest payments can be deferred to June 30, with penalty interest payments exempted. This policy shall apply to all types of businesses in Hubei Province.

"The provisional deferment policy for both principal repayment and interest payment is no small step. Execution of this policy must fully comply with the law and be subject to adequate oversight. This policy should also work in tandem with the fiscal support and banks' re-lending to form synergy and produce holistic effects," Li said.

It was decided at the meeting that the re-lending and re-discount quota will be increased by 500 billion yuan (US$71.2 billion), with the bulk channeled to small and medium-sized banks to increase their credit support to micro-, small- and medium-sized businesses.

The re-lending rate targeting rural areas, agriculture, farmers and smaller businesses will be lowered by 25 basis points to 2.5 percent.