PBOC to allow lenders in 11 provinces to use loan assets as collateral

The People’s Bank of China will allow commercial lenders in 11 provinces to borrow from it using their loan assets as collateral in an attempt to provide cheap financing and enable direct bank lending to targeted sectors of the economy, The Wall Street Journal reported, citing an announcement on the central bank’s website. The move is an expansion of a trial in Guangdong and Shandong provinces, will include lenders in Beijing and Shanghai, and is aimed at “supporting the real economy,” according to the bank’s announcement. It comes amid an increase in bad loans that has made banks less likely to lend to the risky businesses tasked with driving economic growth.