Local branches of the People’s Bank of China (PBOC) are apparently taking advantage of recent liquidity injections to channel loans to private businesses, Caixin reports, although the monthly data suggests there’s more work to be done.
The bank’s Shanghai office said on Tuesday that it has extended Rmb 5.3 billion ($762 million) to eight financial institutions for the purpose of lending to small and micro business this year – a 55% uptick from 2017.
Increases in relending were also reported from branches in Tianjin and Dongguan.
Relending allows commercial lenders to use issued loans as collateral to borrow low-interest loans from the central bank. Local branches have also benefitted from a program called rediscounting, whereby the central bank soaks up outstanding loans by pumping cash into the system.
In the week following October’s decision to raise relending quotas, the Shanghai branch claims to have issued Rmb 1.8 billion in five loans. It also said that it hopes to complete Rmb 3.6 billion in rediscount loans in November.