China’s finance ministry said it would review the list of enterprises that have obtained low-interest loans meant for companies actively engaged in the battle against the coronavirus, in a bid to clamp down on abuse of the cheap funds, reported Caixin.
The Ministry of Finance has ordered local finance authorities to review companies in their jurisdictions that have received the loans, according to a Wednesday statement. The move follows a February initiative by China’s central bank to offer RMB 300 billion ($42.5 billion) of funding to banks for cheap loans to companies that make, transport or sell medical supplies and daily necessities needed in the outbreak.
As of March 30, 5,881 enterprises had obtained a combined RMB 228.9 billion of the low-cost loans, whose weighted average annual interest rate was 2.51%, according to central bank data. The enterprises’ average financing cost came in at 1.26% after securing fiscal subsidies from finance authorities, well below China’s benchmark one-year loan prime rate of 4.05%.
The finance ministry said local authorities should pay special attention to companies that received such loans over RMB 500 million, and those who were granted these loans from multiple financial institutions. It also asked them to take notice of firms that have attracted a high degree of public attention or received loans after March 15, when the domestic epidemic started to stabilize.