By the end of the first half of 2009, Chinese banks' outstanding loans to small and medium sized enterprises (SMEs) reached 12.52 trillion yuan, accounting for 53.7 percent of the total outstanding loans to all the enterprises, according to Yang Jiacai, an official from the China Banking Regulatory Commission (CBRC) in charge of SME financial services.
In the first half this year, new loans to the SMEs increased by 21.42 percent. The growth rate surpassed the average level for the first time, said Yang.
Yang noted that China's banking sector had established a complete financing system for the SMEs since 2005. The country's five state-owned commercial banks and twelve joint-stock commercial banks have all established their specialized institutions providing financial services for SMEs by the end of the first half of 2009.
Since the beginning of this year, the CBRC has loosened the entry criteria for small and medium sized commercial banks. It has planned to set up 1294 new rural financing institutions within three years.
The SMEs' lack of complete credit system was the biggest problem in SME financing, said Yang, adding that SMEs needed a different finance and tax system. Currently, China's SMEs enjoy the same finance and tax policies with larger enterprises, but non-performing loans ratio on the SME portfolios is 4.5 percent while that of large-scale enterprises is only 1 percent.
Yang called on the government to reduce business tax rate for loans to SMEs, so as to release the banks' concerns and arouse their enthusiasm to support SMEs.
By People's Daily Online