The China Banking and Insurance Regulatory Commission (CBIRC) has issued a notice on further improving the financial services for industries and enterprises in difficulty due to the COVID-19 pandemic. The notice sets out requirements for strengthening credit support, making continued financing arrangements, increasing the tolerance for non-performing loans (NPLs), continuously improving service efficiency, innovating credit service models, improving assessment and incentive mechanisms, and leveraging the risk protection function of insurance.
The notice highlights the following key points:
- Banking institutions should timely meet the reasonable and effective credit needs of industries and enterprises facing difficulties due to the pandemic and strive to achieve sustained and steady growth of loan balances in industries hit by the pandemic.
- Banks are encouraged to appropriately raise the tolerance for NPLs in relevant industries within a specific period of time during the pandemic and are required to optimize and adjust their assessment mechanism.
- Commercial banks and other financial institutions should continue to negotiate independently with micro, small and medium enterprises (including their owners), and self-employed individuals, based on the market principles, and make every effort to defer the loan principal and interest repayment for those in need. With regard to the deferred loans, financial institutions should make substantive risk judgment during the deferral period and should not downgrade the risk rating of such loans.
- Banking and insurance institutions should strictly implement various policies on financial service charges and are encouraged to increase the reduction or exemption of financial service charges in favor of industries and enterprises with temporary difficulties due to the pandemic.
- Regulatory authorities at all levels should take into account the changes of the pandemic situation and the impact on regional economy while working with relevant departments to issue regional financial support policies in due course.
Keywords: Asia Pacific, China, Banking, Covid-19, Basel, Credit Risk, Loan Repayment, Payment Deferrals, Lending, CBIRC
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