The People’s Bank of China outlined a list of guidelines for financial institutions to assist small businesses in accessing credit in the latest move by the central bank to soften the impact of wider liquidity tightening on smaller enterprises.
Among the measures was the addition of RMB 150 billion ($22.96 billion) of relending and rediscount quotas for small firms and a cut to the relending interest rate by half a percentage point, according to Caixin.
The aim is to widen financing channels for small businesses that have traditionally been neglected in favour of larger, state-linked enterprises. Along with the PBOC’s decision to cut banks’ reserve requirement ratio and a RMB 200 billion injection into the financial sector, the new guidelines will act as a buffer against problems caused by deleveraging elsewhere in the economy.
Over RMB 100 billion in credit is expected to be given out as a result of the guidelines.