Fintech helps lenders aid small businesses

SHANGHAI: Consistent use of financial technologies has helped China’s banks in Zhejiang and Anhui provinces to lower the costs of loans extended to a greater number of small businesses, thus helping them to tide over financial difficulties, industry insiders said.

Besides, fintech helped banks to increase lending to technology companies and strategic emerging industries.

The China Banking and Insurance Regulatory Commission’s Zhejiang office led banking and insurance institutions to help small businesses overcome financing difficulties, thereby stabilising the financial sector and employment levels.

By the end of February, there were 2.54 million registered micro and small businesses in Zhejiang province, accounting for 88.1% of all its registered companies.

In addition, there were 5.13 million individually-owned family businesses, which are also key target small business clients of banking and insurance institutions.

Bao Zuming, head of CBIRC’s Zhejiang office, said the regulator helped improve loan access to small businesses and brought about a remarkable decline in comprehensive financing costs in the province.

As of the end of February, the provincial banking sector’s outstanding balance of inclusive loans to micro and small businesses – that is to say, loans to small businesses whose total credit lines are up to 10 million yuan (US$1.53mil or RM6.2mil) per borrower – was 2.2 trillion yuan.

There were 5.3 million small-business borrowers in Zhejiang province, up by 154,000 from the beginning of this year.

The interest rate on inclusive loans given to small businesses was 5.62%, down 0.21 percentage point from the start of this year, the local office of CBIRC said.

To solve information asymmetry between financial institutions and small businesses, Zhejiang launched an online platform for comprehensive financial services.

The platform gathered a large amount of data from a number of provincial government departments. — China Daily/ANN

Using big data and other technologies, banks operating in the province increased collateral-free loans, a financial innovation. — China Daily/ANN

The value of transactions on the platform until now has exceeded 1.3 trillion yuan, and data queries surpassed 52 million, benefiting more than 1.08 million enterprises, Bao said at a news conference last week.

With the help of the platform, client managers’ workload of pre-loan investigation was reduced by at least one-third. For 90% of the loans offered through the platform, banks completed the credit granting procedure within three days.

A total of 199 banks that settled down on the platform extended credit of over 360 billion yuan, of which 93.3% was in the form of inclusive loans to small businesses.

More than 26% of the loans were non-collateralised, and 17.2% of the borrowers have never received bank loans before, he said.

By the end of 2020, China’s outstanding balance of inclusive loans to micro and small businesses was 15.3 trillion yuan, up more than 30% year-on-year, said Guo Shuqing, chairman of CBIRC.

The banking and insurance regulator will improve mechanisms so that the financial sector will be able to support key areas, including self-reliance in science and technology, in a more precisely targeted manner, Guo said on March 2.

In Anhui province, the regulator encouraged banks to set up teams and institutions specializing in lending to technology companies.

“We estimate that the growth rate of our provincial banking sector’s loans to tech companies and strategic emerging industries will be more than 5 percentage points higher than the average growth rate of loans in various forms province-wide this year, ” said Zhou Jialong, head of CBIRC’s Anhui office.

Anhui aims to build influential emerging industry clusters with a focus on 10 major emerging industries like new-mode displays, integrated circuits, new energy vehicles and artificial intelligence.

“On the one hand, we optimized the structure of funds by giving support to core enterprises in supply chains. On the other hand, based on core enterprises, we endeavoured to drive the growth of small and medium-sized enterprises in upstream and downstream segments of supply chains, ” Zhou said.

The Anhui office of the CBIRC urged national banking and insurance institutions to take advantage of their parent group’s capability to offer a portfolio of financial services like lending, bond underwriting, wealth management and investment banking.

It also encouraged banks to set up branches specializing in lending to sci-tech innovation companies and establish specially designed assessment and review mechanisms in this field.

“Various banking and insurance institutions (in Anhui) are now taking the provision of financial services to sci-tech innovation companies as a focus of their own strategy transition. In the context of this kind of financial services, they have moved from the exploration stage to the full promotion stage, ” he said. - China Daily/ANN

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