China orders banks to clear hurdles slowing private sector lending: sources

Sat May 14, 2016 2:19am EDT
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By Zheng Li and Pete Sweeney

SHANGHAI May 14 (Reuters) - - China's banking regulator has sent an urgent notice to banks telling them to clear bottlenecks slowing lending to private firms, sources with direct knowledge told Reuters, highlighting rising concern in Beijing about torpid private investment.

Chinese banks sharply cut new lending in April after a record first-quarter credit spree, much of which appeared to go to the state sector and may have helped inflate asset bubbles in real estate and commodities.

According to the document seen by Reuters, the China Banking Regulatory Commission (CBRC) is requiring financial institutions to conduct checks on their implementation of central government directives intended to make it easier for private firms to access bank credit.

It also tells them to work to resolve any problems in cases where lending support to private enterprise is insufficient, including small and micro-businesses.

The document requires institutions to report their implementation results to the regulator by May 20.

The CBRC did not respond to calls seeking comment from Reuters.

The document also called for banks to reduce costs for short-term credit products such as bridge loans, which private firms rely on to stay afloat through tough business cycles, while examining risk in their loan guarantee businesses.

One of the people with direct knowledge of the order said the important part "is to implement State Council requests and notifications. The key points are areas where policy solutions have not been put into place, or measures have not been introduced, impacting private investment's stable and sustainable growth."   Continued...

A bank clerk holds Chinese 100 yuan banknotes at a branch of a commercial bank in Beijing, China, March 30, 2016. REUTERS/Kim Kyung-Hoon