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Premier: Slash financing costs for small businesses

Updated: Apr 30,2018 10:32 AM

“We should make efforts to make financing costs for small and micro-sized enterprises significantly reduced by the end of the third quarter,” Premier Li Keqiang said at the State Council executive meeting on April 25.

At the meeting it was decided to supervise and evaluate the inclusive finance service of banks, to ensure financing costs for the real economy go down.

This is the third time that Premier Li has referred to this topic in the past 30 days. At the executive meeting on March 28, Premier Li demanded that financing costs for small and micro-sized enterprises be significantly reduced in 2018.

During his inspection of the Shanghai free trade zone, the Premier learned that overseas financing through a free trade account will have a relatively lower interest rate. He stressed that this can push domestic banks to reduce financing costs for small and micro-sized enterprises, thus stimulating entrepreneurship and innovation.

At the executive meeting on April 25, Premier Li noted specific requirements again to enhance the inclusive finance service for small and micro-sized enterprises, agriculture, rural areas and farmers. Policies should be fully implemented to make enterprises truly experience reductions in financing costs.

Related officials at the meeting reported that most medium and large scale commercial banks have set up inclusive finance institutions. A specialized management mechanism has generally formed. By the end of 2017, newly granted inclusive finance loans reached 3.4 trillion yuan.

“The business department of inclusive finance has been generally established. Next we will establish a stimulating and restrictive mechanism to stimulate the inner driving power of enterprises.” Premier Li said. “Meanwhile, supervision and auditing should be enhanced.”

Those at the meeting decided to make the service an important reference for supporting policy supervision. Supervision and evaluation measures should be made, a guarantee system improved, and a credit system enhanced.

Banks are encouraged to make specific inclusive credit plans, arrange stimulation funds, and make detailed duty and exemption measures. Products such as medium to long term fixed asset loans for small and micro-sized enterprises should be innovated. The loan quality and comprehensive cost for small and micro-sized enterprises should be controlled properly.

Premier Li said multiple measures should be used to expand the development of inclusive finance. Related departments also should create an environment for financial institutions to reduce the financing cost for small and micro-sized enterprises.

Last, the Premier emphasized that third-party evaluation should be employed to judge whether the work is effective or not. The most important thing is that these enterprises can truly experience a good result, he said.