The People’s Bank of China will roll out its newly-created medium-term lending facility (TMLF), a new tool under which the government will provide long-term, low-cost financing to financial institutions in an effort to increase lending to private businesses, as early as this month, Caixin reports.
The TMLF, which was announced in December, is one of several tools that Beijing is using to encourage banks to channel funds to the private sector. It has cut banks’ reserve requirement ratio four times in recent months, freeing up hundreds of billions of RMB for lending. Officials have also repeatedly badgered banks in public statements to step up their lending.
These moves have been a response to a worrying fall in lending as the economy slows and banks grow increasingly reluctant to take on risk. Growth in outstanding social financing fell to 9.9% in November, a record low, according to figures from the PBOC.