Two monetary policy tools that will be due at the end of the year and directly reach the real economy (inclusive small and micro enterprise loan deferred principal and interest policy and credit loan support plan) have ushered in new arrangements.

According to CCTV News, on December 15, Premier Li Keqiang of the State Council hosted an executive meeting of the State Council. The meeting decided to 1. Convert the inclusive small and micro enterprise loan deferred principal and interest support tool into an inclusive small and micro loan support tool. From 2022 to the end of June 2023, the People’s Bank of China will provide funds for inclusive small and micro-enterprises and individual industrial and commercial households issued by local corporate banks at a rate of 1% of the balance increase to encourage the increase in inclusive small and micro loans. 2. From 2022, the inclusive small and micro-credit loans will be included in the management of the re-lending support plan for supporting agriculture and small-scale micro-credit. The 400 billion yuan re-loan line originally used to support inclusive small- and micro-credit loans can be used on a rolling basis, and can be used again when necessary. Further increase the amount of refinancing. Qualified local corporate banks can issue inclusive small and micro credit loans to the People’s Bank of China for re-loan preferential funding support.

“Currently, small, medium and micro enterprises and individual industrial and commercial households are facing great difficulties. They must focus on protecting market entities, responding to the new downward pressure on the economy, and using market-based measures to increase Financial support for small, medium and micro enterprises and individual industrial and commercial households.” The meeting pointed out.

Two monetary policy tools that directly reach the real economy (inclusive small and micro enterprise loan deferred principal and interest policy and credit loan support plan) were formally established in early June 2020. From 2020 to October 2021, banks have accumulatively deferred the repayment of principal and interest for 14.4 trillion yuan of loans, of which 11.8 trillion yuan has been supported for the deferred principal and interest repayment of small, medium and micro enterprises, and a total of 9.1 trillion yuan has been issued in inclusive small and micro credit loans.

In terms of form and incentive ratio, the inclusive small and micro loan support tool is similar to the existing inclusive small and micro enterprise loan deferred principal and interest support tool.

Initially, the repayment of principal and interest of loans for small, medium and micro enterprises can be deferred up to March 31, 2021, and the loan for inclusive small and micro enterprises “should be extended” , Negotiate extension of loans to other difficult enterprises. On the eve of the expiration of the policy, the State Council will postpone it in March this year, that is, for inclusive small and micro enterprise loans due before the end of 2021, the enterprise and the bank independently negotiate the extension of the repayment of principal and interest, and continue to extend the loan extension The local corporate bank that repays the principal and interest will provide incentives according to regulations, and the incentive ratio is 1% of the loan principal.

Another monetary policy tool that directly reaches the real economy, the credit loan support program for small and micro enterprises is to alleviate the difficulties and pain points of small and micro enterprises lacking mortgage guarantees, To increase the proportion of local corporate banks issuing credit loans to small and micro enterprises. The central bank provides 400 billion yuan of funds to sign a credit loan support plan contract with local corporate banks through a special purpose vehicle (SPV) to provide local corporate banks with preferential financial support.

According to the new arrangement, inclusive small and micro credit loans will be included in the management of the re-loan support plan for supporting agriculture and small businesses from next year, although the current 400 billion line is still unused End, but the State Council has provided follow-up arrangements in advance, that is, the 400 billion yuan re-loan line can be used on a rolling basis, and can be further increased if necessary.

Zou Lan, Director of the Financial Markets Department of the Central Bank of China, said that the central bank will We will coordinate policy support and capital continuation after the expiry of the two instruments, and focus on the quality of deferred loans and credit loans to effectively prevent and control credit risks.