From 2019, loans to small and micro-sized enterprises with a credit line of less than $1.46 million will be eligible for targeted reserve requirement ratio cuts, up from the previous threshold of $0.23 million, according to a statement from the People's Bank of China (PBC).
PBC (Photos: VCG)
This move will enhance the lending ability of commercial banks, increase liquidity and lower capital costs.
Wu Wen, senior researcher from the Bank of Communications, said that this adjustment has expanded the coverage of previous targeted reserve-requirement ratio cuts, including SMEs, loans for agriculture, rural areas and farmers and private sectors.
He Fei, senior researcher from the Bank of Communications, held similar views. He said there are two dimensions to this move: SMEs with a credit line of $0.23 million previously can enjoy a credit line of $1.46 million after the statement; and for SMEs that did not enjoy the preferential policy, they are incorporated to better meet their needs.