Banks urged to loan more

 

December 04, 2008

THE State Council said yesterday it would adopt more favorable policies and update the financial system to encourage the country’s commercial banks to grant more loans to support economic growth.

 

During a meeting presided over by Premier Wen Jiabao, the State Council also said that measures should be taken to raise the country’s ability to ward against risks among financial institutions.

 

It said nine measures would be taken to boost the role of the financial sector, such as the reserve requirement ratio, interest rates and exchange rates to ensure adequate liquidity for the banking sector.

 

Banks, security firms and insurers should be used in a combined way to expand financing and control risks, so that the financial sector would play a better role in supporting economic growth and contributing to industrial restructuring, it said.

 

In the face of the global financial crisis, it was imperative to implement a pro-active fiscal policy and a moderately easy monetary policy, and the financial sector should enhance its role in economic development.

 

Other measures to be used to boost the financial sector are an extra 100 billion yuan (US$14.6 billion) of credit volume for 2008 would be given to the country’s three policy banks -- China Development Bank, China Export and Import Bank, and China Agricultural Development Bank.

 

Measures will also be taken to improve the credit service of commercial banks to meet the demand for loans among SMEs, investors in the countryside and consumers needing loans for homes and cars.

 

Other measures include speeding up construction of a stronger capital market, updating methods of financing, improving the management of foreign exchange, using fiscal funds to help the financial sector reduce bad assets and deepening financial reform to better monitor potential risks.

(Xinhua)