Xinhua Daily:
I have two questions. The first is regarding companies and industries hit hard by the outbreak. What policies do the regulatory authorities have in place in terms of loan rollovers, loan renewals, term renegotiations and tolerance of non-performing loans? Second, micro and small enterprises with low resilience have been hit the hardest by the outbreak. How will you determine if it is the outbreak that results in overdue loans and operation difficulties? Are there any specific criteria? Thank you.
Xiao Yuanqi:
Thank you for your questions. Regarding your first question, we have made the following decisions:
First, for micro, small and medium businesses affected by the outbreak, we support banking institutions in renewing and extending company loans due between Jan. 25 and Jun. 30, whilst the temporarily delayed repayment of the principal and interest can be postponed until Jun. 30 at the latest. For those which are seriously affected by the epidemic and take longer to recover, as well as those with high specificity and in particular industries, repayment may be further postponed as appropriate.
Second, we have made special arrangements for companies in Hubei province. The temporary extension covers all companies in Hubei, be it a micro, small, medium, or large company. We also encourage banking institutions to offer more favorable financing policies to companies affected by the outbreak in Hubei. Banks can set up a special credit quota, and performance assessments should be more weighted towards such companies as appropriate.
Third, we require banking institutions to clearly understand companies' arrangements for financing, and in particular, simplify approval procedures to increase efficiency, delegating moderate approval powers to branch offices. This move will help companies who are supposed to receive support get loans rapidly, and will increase the proportion of credit loans and medium- and long-term loans of micro and small companies, as well as the percentage of clients who obtain their first bank loan.
Fourth, we need to pay attention to the following aspects when offering companies and industries affected by the epidemic temporary loan extensions and renewals. First, we must focus on supporting micro, small and medium enterprises affected by the epidemic that operated normally before the outbreak and have good development prospects. Companies that had been run poorly before the epidemic are not our priority. Second, company operations, flow of credit funds and risks should be monitored and mastered to prevent certain companies from taking advantage of the opportunity for their own gain and to rule out moral risks. Third, we should adhere to the principles of "substance over superficiality," and "determining the actual risks." For epidemic-affected companies enjoying extensions, banking institutions should not adjust their client category, loan category or credit record, and instead retain the originals instead of downgrading them. Of course, if the companies cannot repay the principal and interest after a period of normal operations post-outbreak, banking institutions should downgrade them in accordance with the principle of the market and the rule of law.
As for your second question, the straightforward criteria are as follows:
First, industry-wise speaking, the hardest-hit industries are wholesale, retail, catering, tourism, culture and entertainment, transportation, and logistics. These are obviously the industries most affected by the epidemic and the priority for banking and insurance institutions in providing support.
Second, looking from a regional perspective, Hubei is undoubtedly the epicenter of the outbreak, and the surrounding provinces and regions are also the focus of our endeavors.
Third, from the perspective of a company's upstream and downstream situation, if the upstream and downstream companies belong to affected industries or regions, then the company itself would be hard-hit. So, these are the three criteria.
However, as industries and companies vary from one another, we should analyze the situation on a case-by-case basis and examine the details. Thus, in addition to these general principles and criteria, we require banking institutions to communicate with companies, and provide more accurate and targeted financial services according to the conditions of each company and help them out of difficulties. Thank you.
