China central bank issues guidelines on boosting support for small firms

A woman walks past the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China June 21, 2013. (Reuters pic)

BEIJING: China’s central bank on Monday issued guidelines for increasing financial support for smaller companies, including expanding financing channels for them, improving the business environment and implementing favourable tax policies.

The notice follows a pledge from China’s State Council last week to channel more loans to small firms and reduce their funding costs and Sunday’s announcement from the People’s Bank of China on reducing the amount of cash that some banks must hold as reserves.

The lack of financing for small firms has been a policy challenge to Beijing for years. Large state firms have greater access to funds at cheaper rates even though on the whole they are less efficient than smaller private firms.

Monday’s announcement, made jointly with China’s other financial regulators, said China will increase relending and rediscount quotas by 150 billion yuan ($22.96 billion) to support small firms and the agriculture sector.