A view of the People’s Bank of China in Beijing in January Photo: VCG

 
While giving all-out support to epidemic containment and production resumption, China’s financial system has also attached great importance to risk control, financial regulators said during a press conference on Saturday.

Fan Yifei, vice governor of the People’s Bank of China, the country’s central bank, said China will maintain a prudent monetary policy and make proper adjustments to counter the impact of the epidemic, noting that inflation is unlikely to rise sharply.

As of Friday, China’s banking and financial institutions offered more than 537 billion yuan of credit support to the nationwide fight against the novel coronavirus pneumonia, or COVID-19, said Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC). He also mentioned the CBIRC will soon roll out a slew of new measures to back up enterprises from all walks that are affected by the coronavirus outbreak.

As to relaxing regulatory tolerance of non-performing loan rate for small and micro enterprises, Liang pointed out that the main purpose of regulatory rules is to ensure the stability of the financial system, but the CBIRC will take into account the impact of the epidemic to raise regulatory tolerance of banks’ non-performing loans to businesses in severely-hit regions by giving a grace period for regulatory targets and making flexible arrangements.

Overall, the non-performing loan ratio in China is quite low relative to countries around the world, so the space for adjustment remains relatively large, Fan added.

In order to ease the liquidity difficulties of some companies and individuals, and to prevent abnormal market fluctuations, financial institutions are encouraged to offer extension to stock pledge agreements and appropriately extend the timeline for customers to replenish collateral based on the epidemic situation in different regions, said Yan Qingmin, deputy head of the China Securities Regulatory Commission.

According to Yan, risks of stock pledge, margin financing, and securities lending are generally controllable. At present, the balance of stock pledge financing is 880 billion yuan, down more than 45 percent from the peak. The total amount of margin financing and securities lending is around 1.05 trillion yuan, accounting for 2.13 percent of the circulating market value of A-shares.

Global Times