USEUROPEAFRICAASIA 中文双语Français
Business
Home / Business / Finance

National fund to give smaller companies a helping hand

By Chen Jia | China Daily | Updated: 2018-07-31 09:22
Setting up the financing guarantee fund is a way to reduce financing costs for some targeted areas. [Photo/VCG]

The Ministry of Finance is expected to launch a national fund with initially registered capital of 66.1 billion yuan ($9.68 billion) soon, to support credit for small and micro companies, agricultural-related businesses and innovative startups.

The ministry recently signed an agreement with 20 institutions to jointly establish the National Financing Guarantee Fund Co Ltd, a quasi-public financial institution to conduct financing guarantee business in the form of equity investment and re-guarantee, as one of the measures to implement a more proactive fiscal policy and accelerate investment into the real economy, according to an announcement from the Bank of China, one of the fund's sponsors.

An official from the ministry confirmed this news to China Daily and said it is working with other government departments, including the nation's financial regulators, to develop a system allowing commercial banks to participate in the fund.

With the guarantee from the fund, small and micro companies, agricultural-related businesses and innovative startups can achieve certain standards required by commercial banks for lending, and as a return, the fund could receive fees from the borrowers.

China's three largest State-owned banks-Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of China-all published announcements last week and revealed that they had approved equal investments of 3 billion yuan respectively to the fund, using their own capital. The capital injection shall be paid by installments in four years commencing from this year.

Earlier, four joint-stock commercial banks, including Huaxia Bank and Shanghai Pudong Development Bank, reported a total injection of 7 billion yuan into the fund.

It means so far, about 24 percent of the fund's initial capital has been collected. The State Council urged the speeding up of the opening of the fund at a meeting on July 23.

Setting up the financing guarantee fund is a way to reduce financing costs for some targeted areas, Vice-Minister of Finance Liu Wei said at a news conference on Thursday.

The fund will cooperate with some province-level financing guarantee and re-guarantee institutions "to try to support 150,000 small and micro companies and issue 140 billion yuan in new loans each year", said Liu.

Wang Yi, director-general of the finance department at the ministry, introduced some basic principles for running the national financing guarantee fund at a media briefing on March 30. He highlighted that the fund should neither be used for issuance business for local government bonds, nor be invested into the property and stock markets.

Under the scheme, once credit default cases happened, as Wang said, both the guarantee fund and the commercial banks will share the risks, and the government-backed fund will take a larger proportion according to successful pilot programs in some provinces, such as in Zhejiang.

Top
BACK TO THE TOP
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US