China’s financial regulators have made out a schedule to implement credit support for small and micro-sized enterprises, aiming to channel funds into the real economy and strengthen growth momentum.

A comprehensive policy package that debuted this week, including monetary policy, fiscal stimulation, and financial regulations, was seen as the strongest measure to channel funds to the small and micro-sized business sector, which contributes nearly 60 percent of the country’s GDP and 80 percent of the jobs.

The key objective of the policy package is to increase bank lending while reducing the lending rates to small and micro-sized enterprises, accompanied by tax incentives, the People’ Bank of China Governor Yi Gang said in a teleconference on June 30.

“Effects of the policy package should be seen in the third quarter, followed by a stable credit growth for small and micro-sized enterprises,” said Yi, who also called for “effective implementation” of the policies at the teleconference, which was attended by several regulators and senior executives from top financial institutions.

Other key objectives include steps to increase the number of enterprises that could acquire bank loans, enlarge the lending amounts, control lending costs at a “reasonable” level and prevent credit risks, according to Yi.

Last week, the PBOC, the central bank, announced cuts in the reserve requirement ratios, or the cash amount set aside by financial institutions, by half a percentage point for large State-owned commercial banks, joint-stock commercial banks, the Postal Savings Bank of China, city commercial banks, non-county rural commercial banks and foreign-funded banks, starting July 5.

The total funds released from RRR cuts, which could be 200 billion yuan ($30.18 billion), should be used to issue loans for small and micro-sized enterprises, so as to ease their financing difficulties and lower funding costs, according to the central bank.

The move is also expected to cushion domestic growth slowdown, especially in the second half, when the sequential GDP growth is expected to slow to a modestly lower level, though on a year-on-year basis real GDP growth should remain broadly stable, said Song Yu, an economist with Beijing Gao Hua Securities Co Ltd.

The nation’s small and medium-sized enterprises have long struggled to secure credit that tends to flow to State-sector companies, as risk-averse banks usually prefer projects with “implicit guarantees” from local governments.

Besides, the central bank will raise the lending quota to commercial banks by 150 billion yuan for loans to small and micro companies and the agricultural sector, and reduce the one-year lending rate by 50 basis points to 2.75 percent.

Policymakers are also determined to stamp out speculation, such as loan defrauding by unqualified companies to ensure that the funds can be channeled into the relatively weaker part of the real economy.