The Ministry of Finance is expected to launch a national fund with initially registered capital of 66.1 billion yuan ($9.68 billion) soon, to support credit for small and micro companies, agricultural-related businesses and innovative startups.
The ministry recently signed an agreement with 20 institutions to jointly establish the National Financing Guarantee Fund Co Ltd, a quasi-public financial institution to conduct financing guarantee business in the form of equity investment and re-guarantee, as one of the measures to implement a more proactive fiscal policy and accelerate investment into the real economy, according to an announcement from the Bank of China, one of the fund’s sponsors.
An official from the ministry confirmed this news to China Daily and said it is working with other government departments, including the nation’s financial regulators, to develop a system allowing commercial banks to participate in the fund.
With the guarantee from the fund, small and micro companies, agricultural-related businesses and innovative startups can achieve certain standards required by commercial banks for lending, and as a return, the fund could receive fees from the borrowers.
China’s three largest State-owned banks — Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of China — all published announcements last week and revealed that they had approved equal investments of 3 billion yuan respectively to the fund, using their own capital. The capital injection shall be paid by installments in four years commencing from this year.
Earlier, four joint-stock commercial banks, including Huaxia Bank and Shanghai Pudong Development Bank, reported a total injection of 7 billion yuan into the fund.
It means so far, about 24 percent of the fund’s initial capital has been collected. The State Council urged the speeding up of the opening of the fund at a meeting on July 23.
