Central bank eyes credit boost to SMEs in new measure

The Chinese central bank will cut the cash amount that should be received in some banks, a targeted measure to release additional funds into the financial sector and increase credit to small businesses hit by the novel coronavirus outbreak, a central bank vice-governor said on Thursday.

The next step to support the corporate sector is to inject more long-term capital, through targeted reduction of the reserve requirement ratio in a special group of banks which have lent a certain amount of credit to small and medium-sized enterprises (SMEs), said Liu Guoqiang, vice-governor of the People's Bank of China, at a media conference.

"The prudent monetary policy will focus more on supporting economic growth, which will be more flexible and moderate," he added.

Additional measures will be issued to reduce financing costs for companies, including driving down the loan prime rate, the new benchmark for the lending rate, and facilitate re-lending and re-discounting at an appropriate time.

Medium and small commercial banks, which have pressure of liquidity and capital adequacy, will get supportive policies to ensure that they have ample funds to lend to corporations, according to Liu.