A bank employee (second from right) addresses queries on an inclusive loan product at a production facility of a medical equipment company in Nantong, Jiangsu province, in March. XU CONGJUN/FOR CHINA DAILY

Many special loans, insurance products in place for smaller firms in difficulties

Chinese banks and insurers have ramped up financial support for micro and small enterprises (MSEs) and self-employed individuals as they have been facing a significant increase in difficulties since the beginning of this year.

To help market entities tide over tough times, the Industrial and Commercial Bank of China Ltd, the country's largest State-owned commercial lender by assets, saw its outstanding balance of inclusive loans rise 43 percent year-on-year at the end of the first quarter.

First-time borrowers accounted for about 40 percent of the bank's new MSE clients in the first quarter. The comprehensive financing cost of MSEs at the bank fell 60 basis points from the previous year, said Liao Lin, vice-chairman and president at ICBC, at a news conference on May 19.

Ever since the COVID-19 pandemic first hit in Wuhan, Hubei province, ICBC has deferred repayments on principal and interest, which involves a loan principal of more than 400 billion yuan ($59.77 billion) for 265,000 MSEs whose total credit lines are up to 10 million yuan per borrower. Since the beginning of this year, the bank has deferred repayments on the principal of 68.2 billion yuan for 31,000 MSEs.

"We used digital technologies to enhance our capabilities to serve small businesses and ensure that our funds will arrive at MSEs directly and precisely," Liao said.

"With the help of data and credit of core enterprises in supply chains, our bank granted unsecured loans to upstream and downstream MSEs to help them lower financing costs and improve the utilization efficiency of funds … So far, we have adopted digital solutions that offer financing for over 2,300 supply chains in a number of industries including agriculture, healthcare and logistics," he said.

China CITIC Bank Corp Ltd, a national joint-stock commercial lender, also launched a suite of digital loan products in accordance with the characteristics of MSEs, using big data analytics in supply chains to evaluate the performance and creditworthiness of small businesses, said Fang Heying, vice-chairman and president of the bank.

For upstream manufacturing MSEs, China CITIC Bank made decisions on whether to grant a credit line to a company based on its order and historical contract fulfillment data. For downstream sales MSEs, it developed an unsecured loan product based on real transaction scenarios and transaction data of a company. For sci-tech companies, it provided another type of unsecured loan through analyzing big data to assess a company's technological advantages and innovation capacity.

Allowing small businesses to apply for these loans online without collateral, the bank can complete the process of loan approvals and issuances very efficiently via a smart risk management platform, Fang said at the news conference.

As of the end of the first quarter, the outstanding balance of inclusive loans at China CITIC Bank reached nearly 400 billion yuan, up 32.1 billion yuan from the beginning of this year. The number of first-time borrowers increased by 2,439 in the first three months, accounting for nearly 20 percent of its new MSE borrowers that were granted loans.

In addition, the bank deferred repayments of principal and interest of over 5 billion yuan for 2,000 businesses in the first quarter, the majority of which are MSEs facing difficulties. It also reduced or waived 11 items of service fees for MSEs and self-employed individuals.

Recently, Beijing has been tightening COVID-19 restrictions because of a resurgence of infections in the capital city. People's Insurance Co (Group) of China Ltd, one of China's leading insurers, and the Chaoyang District People's Government of Beijing Municipality jointly launched an insurance product for services companies in the district to support the fight against the pandemic.

PICC provided compensation of 100 yuan per day for each employee of services companies for a maximum of 21 days as the companies are forced to close temporarily due to government requirements for the prevention and control of COVID-19 during this round of the outbreak. It also allowed each services company to receive a total compensation of up to 100,000 yuan for each shutdown occurrence.

As of the end of April, the insurance plan had covered around 740,000 people at 62,000 companies, and the insurer had settled claims totaling over 1.35 million yuan for about 250 businesses and more than 1,200 people, said Wang Tingke, vice-chairman and president of PICC.