Eight departments jointly issued the "Guiding Opinions on Further Strengthening Financial Services for Small, Medium, and Micro Enterprises."

To further promote financial support policies that better meet the needs of market entities, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the State Administration for Market Regulation, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange recently jointly issued the "Guiding Opinions on Further Strengthening Financial Services for Small, Medium, and Micro Enterprises" (Yin Fa [2020] No. 120). Number, hereinafter referred to as the “Opinions”).

The "Opinions" propose 30 policy measures across seven key areas: implementing credit support policies for the resumption of work and production by small, medium, and micro enterprises; launching a project to enhance commercial banks' capacity to provide financial services to these enterprises; reforming and improving the external policy environment and incentive and constraint mechanisms; leveraging the financing support role of multi-level capital markets; strengthening the construction of credit systems for small, medium, and micro enterprises; optimizing local financing environments; and reinforcing organizational implementation.

Guiding Opinions of the People's Bank of China, the CBIRC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Finance, the SAMR, the CSRC, and the State Administration of Foreign Exchange on Further Strengthening Financial Services for Small, Micro, and Medium-sized Enterprises

Yinfa [2020] No. 120 Number

  In the face of the significant impact of the COVID-19 pandemic on small, medium, and micro-sized enterprises, financial and relevant departments have resolutely implemented the decisions and deployments of the Party Central Committee and the State Council, acted swiftly and proactively, and introduced a series of measures to boost domestic demand, facilitate the resumption of production, and safeguard employment. These measures have provided targeted financial services to support epidemic prevention and control, the resumption of work and production, and the development of the real economy. To better align financial support policies with the needs of market entities, further unblock internal and external transmission mechanisms, and promote a marked increase in the financing scale and further optimization of the financing structure for small, medium, and micro-sized enterprises (including individual business households and small business owners; excluding local government financing platforms—hereinafter the same), thereby achieving “increased volume, lower costs, improved quality, and broader coverage,” accelerating the return to normal production and living order, and supporting high-quality development of the real economy, we hereby put forward the following recommendations.

I. Fully and faithfully implement the credit support policies for the resumption of work and production by small, medium, and micro-sized enterprises.

  (1) Arrange for the deferral of principal and interest payments on loans to small, medium, and micro enterprises. Improve the policy on deferring principal and interest payments and increase...

The intensity of support for extending principal and interest repayment terms for inclusive small and micro enterprises. Banking and financial institutions should step up efforts to implement relevant policies and increase the proportion of enterprises benefiting from these measures. For enterprises that were operating normally before the pandemic but have since faced operational difficulties due to the pandemic’s impact, loan terms should be extended to the fullest extent possible. Institutions should tailor their support to the specific needs of each enterprise, offering flexible options such as installment repayment of principal and spreading interest payments evenly across subsequent repayment dates. They should also enhance response efficiency, streamline application procedures, and encourage online processing wherever feasible.

  (2) Give full play to the leading role of nationwide banks. Nationwide banks should make good use of both the comprehensive and targeted reserve requirement ratio cuts to achieve “increased volume and lower prices” in loans to small, micro, and medium-sized enterprises. They should formulate detailed implementation plans and track progress on a monthly basis. The five major state-owned commercial banks have seen loan growth for inclusive small and micro enterprises exceeding 40%. Nationwide banks must reasonably pass on benefits to borrowers, ensuring a significant expansion in coverage of loans to small, micro, and medium-sized enterprises and a substantial reduction in overall financing costs.

  (3) Make good use of the relending and rediscount policies. Branches of the People's Bank of China should make full use of the relending and rediscount policies to guide financial institutions to focus on supporting small, medium, and micro-sized enterprises, as well as sectors such as poverty alleviation, spring plowing preparation, poultry and livestock breeding, foreign trade, tourism and entertainment, accommodation and catering, and transportation. Strengthen supervision and management to ensure that fund disbursements are lawful and compliant, and to prevent any misappropriation or leakage. Small and medium-sized banks should make good use of the funds from relending and rediscount programs, encourage these banks to increase their own capital support, promote greater credit lending to small, medium, and micro-sized enterprises, and help reduce financing costs.

  (4) Effectively implement the special credit lines provided by development and policy banks. Development and policy banks shall, by June 2020... By the end of the month, the special credit line of 350 billion yuan will be fully implemented to support small, medium, and micro enterprises in resuming work and production at preferential interest rates. We will formulate an implementation plan for this bank’s special credit line and submit monthly reports on its progress.

  (5) Strengthen support for insurance coverage. Insurance institutions are encouraged to offer targeted loan guarantee insurance products tailored to the specific extent to which small, medium, and micro-sized enterprises have been affected by the epidemic. Insurance companies are also encouraged to differentiate between country-specific risk types, further expand the coverage of export credit insurance, and enhance risk protection for small, medium, and micro-sized enterprises engaged in exports. During the epidemic prevention and control period, insurance companies are encouraged to explore innovative and effective claims-handling methods to ensure that policyholders who experience losses receive timely and convenient claims services.

II. Launch a Project to Enhance Commercial Banks’ Financial Service Capabilities for Small and Micro Enterprises

  (6) Raise our political awareness and transform our business philosophy. We must attach great importance to financial support for the real economy, including small, medium, and micro enterprises affected by the pandemic, and strengthen our sense of social responsibility. In line with the requirements of supply-side structural reform in the financial sector, we should shift our operational focus and credit resources from a preference for real estate and local government financing platforms to the real economy sectors, particularly small, medium, and micro enterprises, thereby optimizing the growth of new credit resources and restructuring existing ones.

  (7) Improve internal resource allocation and policy arrangements. Large and medium-sized commercial banks should effectively implement the “five specialized” mechanisms of inclusive finance departments, separately allocating special credit plans for small and micro enterprises, private enterprises, manufacturing, and other sectors, and appropriately delegating approval authority. Reform the cost-allocation and profit-sharing mechanisms for small- and micro-loan business lines. For nationwide commercial banks, the preferential treatment in internal transfer pricing should be no less than 50 basis points; smaller and medium-sized banks may, based on their own specific circumstances, adopt internal transfer pricing preferences or economic profit subsidies.

(8) Improve internal performance assessment and evaluation. Commercial banks should increase the weight assigned to inclusive finance in the performance assessments of branches and senior management teams, raising the weight of inclusive finance in the overall performance assessments of branches to over 10%. They should reduce the weight given to profit targets for micro and small enterprise finance and increase the weight assigned to assessing the quality of customer service provided to micro and small enterprises. Furthermore, they should refine the internal criteria and procedures for determining due diligence and exemption from liability—for instance, treating any case where there is no clear evidence of negligence as one of due diligence—and gradually raise the proportion of micro and small loan practitioners who are exempt from liability, thereby boosting their enthusiasm for engaging in micro and small enterprise lending business.

  (9) Significantly increase credit loans, first-time loans, and loan renewals without principal repayment for small and micro enterprises. Commercial banks should optimize their risk assessment mechanisms, place greater emphasis on examining the primary source of repayment, and reduce reliance on collateral and guarantees. On the premise that risks remain manageable, strive to substantially increase the proportion of newly issued credit loans. Urge commercial banks to boost the number of households obtaining loans from the banking system for the first time. Allow eligible renewal loans for small and micro enterprises to be classified as normal loans, and encourage commercial banks to step up their lending of medium- and long-term loans, aiming to achieve a renewal loan ratio for small and micro enterprises in 2020 that is higher than the previous year’s level.

  (10) Leverage fintech tools to empower financial services for small and micro enterprises. Commercial banks are encouraged to use technologies such as big data and cloud computing to develop risk-pricing and risk-management models, and to transform their credit approval and disbursement processes. They should deeply explore and integrate internal credit information on small and micro enterprise customers, strengthen connectivity with external credit information platforms—including those operated by credit reporting agencies, tax authorities, and market regulators—to enhance customer identification and lending capabilities. By removing bottlenecks in the “last mile” of corporate financing, we can effectively meet the financing needs of small, medium, and micro enterprises.

III. Reform and improve the external policy environment and incentive and constraint mechanisms.

  (11) Strengthen the counter-cyclical adjustment and structural optimization functions of monetary policy. Implement a prudent monetary policy, comprehensively employ monetary policy tools such as open market operations and medium-term lending facilities, maintain reasonably ample liquidity in the banking system, and guide financial institutions to increase credit support for small, micro, and medium-sized enterprises.

  (12) Leverage the role of the Loan Prime Rate (LPR) reform. Incorporate the spread between major bank lending rates and the LPR into macroprudential assessment and evaluation, and closely monitor changes in lending spreads at small and medium-sized banks. Urge banking financial institutions to embed the LPR into their internal pricing and transmission processes, thereby smoothing the internal interest rate transmission mechanism within banks. In accordance with market-oriented and rule-of-law principles, steadily advance the transition of existing floating-rate loans to new pricing benchmarks.

  (13) Optimize external incentives in regulatory policies. Promote the revision of the Commercial Bank Law and study amendments to the provision requiring commercial banks to provide collateral for loans, thereby facilitating access to credit for small and micro enterprises. Conduct regulatory evaluations of commercial banks’ financial services for small and micro enterprises, and continue implementing the “double increase” requirement—namely, accelerating the growth rate and increasing the number of small and micro enterprise loans that are inclusive in nature. Further relax the tolerance level for non-performing loans among inclusive small and micro enterprises.

  (14) Study and refine the performance evaluation system for financial enterprises. Revise and improve the management of financial enterprise performance evaluation.

The approach involves easing the requirement for profit growth in the performance assessments of state-owned financial enterprises. Linking financial institutions’ performance evaluations to their lending activities targeting inclusive small and micro enterprises. Guiding financial institutions to better implement the nation’s macro strategies, serve the real economy, and step up support for financing small and micro enterprises. Encouraging risk management subsidiaries of futures companies to provide small and micro enterprises with higher-quality and more convenient risk management services through over-the-counter options, warehouse receipt services, and other similar mechanisms.

(Fifteen) Better implement preferential fiscal and tax policies. Increase tax incentives and rewards for financial services to small and micro enterprises.

Intensify publicity efforts for supplementary measures, striving to ensure that all eligible individuals fully benefit from them. Strengthen financial guarantees for special funds dedicated to the development of inclusive finance, and ensure proper implementation.

Pilot program for comprehensive financial services reform to provide fiscal support for small and micro enterprises.

  (16) Leverage the role of local government-backed financing guarantee institutions. Establish a performance evaluation system for government-backed financing guarantees that highlights their quasi-public good nature and policy orientation. Gradually eliminate profit-based performance targets and instead place greater emphasis on evaluating their effectiveness in supporting small and micro enterprises and agriculture (including indicators such as the number of new clients, loan amounts, proportion of loans, fee levels, etc.), reducing counter-guarantee requirements, promptly fulfilling indemnity obligations, and the rate of first-time loan approvals. Implement an incentive and constraint mechanism that directly links evaluation results to funding replenishment, risk compensation, and salary and benefit packages. Gradually increase the leverage ratio of guarantees and reduce the average guarantee fee rate of government-backed financing guarantee and reinsurance institutions to below 1%.

  (17) Accelerate the operation of the National Financing Guarantee Fund. In 2020, strive to increase the scale of re-guarantee business by 4,000. 100 million yuan. We will collaborate with banking and financial institutions to carry out bulk guarantee loan business, increasing the risk-sharing ratio in bulk cooperative projects to 30%. For guarantee businesses involving individual clients of 1 million yuan or less, we will waive re-guarantee fees. Throughout 2020, we will reduce re-guarantee fees by half for guarantee businesses exceeding 1 million yuan.

  (18) Rectify and standardize unreasonable and illegal financing charges. Strengthen regulatory inspections targeting irregular fees, bundled lending, cost-passing, and the practice of linking deposits to loans—practices that covertly inflate the actual financing costs for small and micro enterprises in banking and financial institutions’ small and micro-loan businesses—and impose strict accountability and penalties.

  IV. Leverage the financing support role of a multi-tiered capital market

  (19) Increase support for financing in the bond market. Guide corporate credit bonds to achieve net financing that is higher than last year’s level.

An additional 1 trillion yuan will be allocated to encourage large enterprises to issue more bonds for financing, thereby freeing up credit resources to support loans for small and micro enterprises. The approval process for special financial bonds targeting small and micro enterprises will be optimized, bottlenecks in the approval process will be addressed, and post-approval management will be strengthened, effective in 2020. Annually support financial institutions in issuing special financial bonds for small and micro enterprises totaling 300 billion yuan. Further enhance the role of corporate bond financing instruments in supporting private enterprises. Promote the development of credit risk mitigation tools and credit protection instruments, and popularize non-publicly issued convertible corporate bonds as a financing tool.

  (20) Enhance the efficiency of commercial bill financing for small, medium, and micro enterprises. For those SMEs that genuinely require delayed payment...

For enterprise payments, we will promote the use of commercial bills of exchange that better protect the legitimate rights and interests of small, medium, and micro-sized enterprises. We will also facilitate the interconnection between supply chain information platforms and commercial bill infrastructure, accelerate the standardization and innovation of commercial bill products, and enhance the efficiency of accounts receivable financing for small, medium, and micro-sized enterprises.

(21) Support high-quality small and medium-sized enterprises (SMEs) in going public or listing on the stock exchange for financing. Support eligible SMEs to raise funds by listing on the Main Board, the STAR Market, the SME Board, and the ChiNext Board. Accelerate the reform of the ChiNext Board and pilot the registration-based system. Optimize the issuance and financing mechanisms of the New Third Board, introduce a public offering mechanism targeting unspecified qualified investors, remove the limit of 35 new shareholders per single targeted offering, allow internal small-scale financings to be conducted through self-arranged issuances, and reduce corporate financing costs. Establish a Select Tier, set up a transfer-listing system, and permit companies listed on the Select Tier for one year and meeting relevant conditions to directly transfer to the main board, thereby opening up an upward channel for listed companies to continue growing and thriving. Establish differentiated investor suitability standards for the Basic Tier, the Innovation Tier, and the Select Tier, attract long-term capital such as public mutual funds, and optimize the investor structure.

(22) Guide private equity investment and venture capital to invest early and in smaller enterprises. Revise the "Interim Measures for the Supervision and Administration of Private Equity Investment Funds" (Order No. 105 of the China Securities Regulatory Commission) to strengthen differentiated regulation and self-regulation of venture capital funds. Develop "Standards for Venture Capital Enterprises" to guide and encourage venture capital firms and angel investors to focus their investments on innovative and creative small, medium, and micro-sized enterprises. Encourage asset management products to increase their support for venture capital investments and gradually raise the proportion of equity-investment-based asset management products. Improve the mechanisms for coordinated investment and lending as well as coordinated insurance and investment between financial institutions such as banks and insurers and venture capital enterprises, and strengthen market-oriented cooperation between venture capital firms and financial institutions. Promote the refinement of policies governing the use of insurance funds to invest in venture capital funds.

  (23) Promote pilot programs for innovation in regional equity markets. Select qualified regional equity markets to carry out pilot programs for institutional and business innovation, and push for revisions to policy provisions concerning trading systems, financing products, and corporate governance in regional equity markets. Encourage relevant departments and local governments to step up their policy support efforts and leverage regional equity markets as a comprehensive platform for implementing local policies and measures aimed at supporting small, medium, and micro-sized enterprises. Strengthen integration with credit reporting agencies, tax authorities, market regulators, and local credit platforms, and encourage participation from commercial banks, securities firms, private equity investment institutions, and other entities. Promote commercial banks to provide related financial services.

V. Strengthen the construction of a credit system for small, medium, and micro enterprises.

  (24) Increase guidance on the development of local credit information platforms and comprehensive credit service platforms for SME financing. Study and formulate relevant standards covering data catalogs, operational management, and other aspects, and encourage local governments to make full use of existing credit information platforms to establish local credit information platforms and comprehensive credit service platforms for SME financing. Support regions with appropriate conditions to set up market-oriented credit rating agencies to operate and maintain these local platforms. Building on these local service platforms, accelerate the realization of interconnectivity and support integrated regional economic development. Explore the establishment of databases featuring high-quality small and micro enterprises, including single-champion manufacturers in specific industries, specialized, refined, and innovative “little giants,” specialized and innovative SMEs, as well as SMEs included in advanced manufacturing clusters designated by industrial authorities and those targeted by industrial enterprises’ technological transformation and upgrading plans. Build platforms for industry-finance collaboration, strengthen information sharing and comparison, facilitate connections between financial institutions and small and micro enterprises, and provide high-quality financing services. Improve and promote...

“Xin Yi Dai” model.

(25) Establish a unified registration and publicity system for movable property and rights-based security interests. Promote reforms in the registration of movable property and rights-based security interests, and set up a unified registration and publicity system for such interests, gradually enabling market entities to handle registrations of movable property and rights-based security interests on a single platform.

6. Optimize the local financing environment

(26) Establish and improve a loan risk subsidy and reward mechanism. Local governments with appropriate conditions may, based on local circumstances, set up risk compensation “funds pools” to provide interest subsidies and rewards for loans to small, medium, and micro enterprises, as well as capital replenishment for government-backed financing guarantee institutions, all under the limitation of their respective capital contributions and bearing limited liability. Perfect the management system for risk compensation funds, reasonably define the entities eligible for custody and the compensation conditions, and enhance the efficiency of using these funds.

  (27) Support the provision of supply-chain financial services to small, medium, and micro-sized enterprises. Promote industry-finance integration and advance full-chain financial services. Encourage the development of supply-chain financial products such as order financing, warehouse receipt financing, inventory financing, and accounts-receivable financing. Leverage the role of accounts-receivable financing service platforms to facilitate RMB 8,000 billion in accounts-receivable financing for small, medium, and micro-sized enterprises in 2020. Hundred million yuan. Strengthen policy coordination among departments such as finance, fiscal affairs, industry and information technology, and state-owned assets management, and accelerate the integration of core enterprises, fiscal authorities, and accounts receivable financing service platforms. Strive to ensure that all state-owned commercial banks and major joint-stock commercial banks are connected to the accounts receivable financing service platform.

(28) Promote local governments to deepen reform in the areas of deregulation, regulation, and service provision. Encourage local governments to strengthen their principal responsibilities in risk-sharing, information sharing, and settling outstanding accounts receivable. Continue organizing efforts to clear overdue payments owed to private enterprises and small- and medium-sized micro-enterprises, and urge government departments and large enterprises to pay all due but unpaid accounts promptly and in compliance with laws and regulations. Support localities that meet the conditions to explore establishing platforms such as loan-extension centers, first-loan centers, and property-rights confirmation centers, providing convenient and business-friendly services. Continue to eliminate unreasonable and illegal fees imposed by local government departments and intermediary agencies in the financing process for small- and medium-sized micro-enterprises.

7. Strengthen organizational implementation.

(29) Strengthen organizational promotion. Branches of the People's Bank of China and dispatched institutions of the CBIRC can, through establishing...

Establish special task forces and other mechanisms to strengthen coordination with local departments including those responsible for development and reform, finance and taxation, industry and information technology, commerce, and state-owned assets. Tailor-specific initiatives to enhance commercial banks’ financial service capabilities for small, medium, and micro enterprises by focusing on strengthening internal incentives, providing enhanced support for first-time borrowers, improving service efficiency, reducing financing costs, strengthening bank-enterprise matchmaking, and optimizing the financing environment.

(30) Improve monitoring and evaluation. Explore establishing a scientific and objective nationwide survey on the financing conditions of small, medium, and micro enterprises.

Examine statistical systems and evaluation frameworks, develop an index of financial conditions for small, medium, and micro enterprises, and release it to the public in a timely manner. Branches of the People's Bank of China at or above the sub-provincial city level, in collaboration with local banking and insurance regulatory bureaus, will explore establishing regional evaluation systems for the financial environment of small, medium, and micro enterprises at the prefectural and county levels. These systems will focus on assessing the level of financial services provided to SMEs within their jurisdictions, as well as aspects such as financing guarantees, transparency and information sharing by government departments, and the timely settlement of accounts receivable. Where appropriate, the evaluation results for financial institutions and local governments at the municipal and county levels will be communicated to the superior authorities of these financial institutions and to local governments at or above the sub-provincial level, thereby fostering a sound financial ecosystem.

People's Bank of China, CBIRC, NDRC

Ministry of Industry and Information Technology, Ministry of Finance, State Administration for Market Regulation

Securities Regulatory Commission Foreign Exchange Administration

2020 May 26 day