Necessary to Lift Banks' Bad Debt Cancelation Right

In order to encourage commercial banks to grant loans to small and medium enterprises (SMEs), it is necessary to entitle the banks more decision-making power of cancelling bad debts after verification, said Di Na, deputy head of the SME unit of the Ministry of Industry and Information Technology, on December 2, 2009.

In fact, banks were conducting structure adjustment on their own while the government encourages them to offer loans to the SMEs. Yesterday, the ministry, together with the Big Four lenders in the nation like Bank of China (SEHK: 3988; SHSE: 601988), Industrial and Commercial Bank of China (SEHK: 1398; SHSE: 601398), China Construction Bank (SEHK: 0939, SHSE: 601939), and Agricultural Bank of China, inked a memo of understanding (MoU), in a bid to help the SMEs finance.

By far, outstanding loans granted to SMEs accounted for 53% of total corporate loans nationwide and outstanding loans to small enterprises, taking 17%.

Source: dycj.ynet.com (December 03, 2009)

Related terms: agricultural, bank, china, commercial, corporate, debt, finance, industrial, information technology, SinoCast China Business Daily news, SME, commercial bank, decision-making power, bad debt, financing