China Merchants Bank plans to lend at least 5 billion yuan (US$730 million) in 2009 to domestic smaller enterprises, compared with a total of less than 10 billion yuan for the purpose in the past two decades, the bank said on Saturday.
Earlier this month, the bank obtained a financial license from the China Banking Regulatory Commission for its newly formed smaller enterprise credit center in eastern China's Jiangsu Province.
The country's top banking regulator issued a guideline on December 1 for commercial banks to set up financial institutes specializing in providing services to smaller enterprises. The CMB center is the first institute of its kind to get the license from the regulator.
"We will provide loans up to 10 million yuan to companies with annual revenue below 100 million yuan," said Wei Xiaoping, the center's vice chief.
According to the regulator's guideline, such specialized institutions should be established by commercial banks as a quasi-corporate body or a subsidiary that will run independently.
"Our long-term goal is to develop the credit center into a real specialist bank for smaller companies," said Yang Shaowei, the center's head.
Smaller enterprises are identified by the regulator as those with an authorized credit of not more than 5 million yuan, assets of less than 10 million yuan or annual sales of less than 30 million yuan.
Amid the global financial crisis, China's small and medium-sized enterprises, which are largely labor-intensive and vulnerable to fluctuations in domestic and external demand, are affected the most.
In the first half of this year, 67,000 SMEs, each with a business volume exceeding 5 million yuan, closed and laid off more than 20 million employees, said the National Development and Reform Commission. That figure doesn't include service industry firms or small companies with sales of less than 5 million yuan.
(Xinhua News Agency December 15, 2008)
