The PBOC also said, as of Dec. 5, it would lower the reserve requirement ratio by 1 percentage point at large banks and 2 percentage points at other banks. The reduced reserve requirement would free more money for banks to lend, pumping around 640 billion yuan into the system, said Jin Xin, an Everbright Securities analyst.
SMEs largely remain pessimistic over these measures.
"We still cannot solve the mortgage problem to satisfy commercial banks, although we starve for funds to maintain operation and upgrade equipment," said Deng Yakun, manager of Jiadi Architectural Decoration Engineering Co. Ltd. in north China's port city Tianjin.
"Our land is rented. We have no other worthy goods for mortgage. Since we cannot find credit guarantees, we cannot overcome this hurdle, no matter how many rounds the central bank cut interest rates," said Deng.
There are unsecured loan services from some commercial banks, i.e., free of guarantee and mortgage, but the interest rates might stand as high as 20 percent to disperse the risks to banks. "We simply cannot afford it," said Deng.
On Sept. 4, China's State Administration for Industry & Commerce allowed the use of enterprise equities as a pledge in applying for bank loans.
The new document - Measures for Equity Pledge Registration with Administration for Industry and Commerce, which took effect on Oct. 1, provides a new low-cost financing channel for money-hungry SMEs in the country.
According to the document, equities that may be used as pledges are confined to equities in limited liability companies and stock limited companies, excluding equities in stock limited companies already registered with securities registration and clearing organizations, and "equities with problems", that is to say, equities that have been frozen by the court.
Meanwhile, China has built a multi-level credit guarantee system for SMEs. China has established 3,366 credit guarantee institutions for SMEs with an accumulative guarantee fund amounting to 805 billion yuan, said Zheng Xin, an official with the National Development and Reform Commission (NDRC).
These credit guarantee institutions have completed credit evaluation and credit information collection on more than 200,000 SMEs, helping insured enterprises to add sales income totaling 342.5 billion yuan, increase profits and taxes of 26.8 billion yuan, and to offer 1.5 million new employment posts.
PBOC will also propel SME-prone financial innovations to ease the fund shortage of SMEs this year, said Yi Gang, vice governor of the bank recently.
According to Yi, financing products for non-financial corporations such as corporate bonds, short-term financing bills and mid-term notes will be actively promoted in the future so as to enlarge the financing channels of SMEs.
To add more credit loans to SMEs, China has piloted small-sum loan companies tailored for SMEs.
In May, China Banking Regulatory Commission and PBOC jointly issued guidelines for piloting small-sum loan companies across the country.
After three months preparation, east China's Shanghai has approved the setting up of 17 small-sum loan companies in 10 suburb districts under the city. Three such companies have gone into business in Baoshan District, Songjiang District and Puding New District respectively.
Li Yueru, general manager of the Baolian small-sum loan company in Baoshan District, the first going into operation on Nov. 15, has received 400 visitors from all walks of life in two weeks.
The private business sponsored loan company, with a registered capital of 50 million yuan, is a lender to provide small-sum loans mainly to small businesses and farmers. It is not permitted to take public deposits and its capital sources are mainly from shareholders, donations and finances from banks.
