THE country’s financial institutions must support small and private firms, a vice chairman of the country’s banking and insurance regulator said yesterday, adding that the regulator will not discriminate between State-owned and private firms.

“We have required banks and insurers to take strong and effective measures to ease funding difficulties facing small and private firms,” Zhou Liang, vice chairman of China’s Banking and Insurance Regulatory Commission (CBIRC), told a finance forum.

For private firms that face temporary difficulties but still operate normally, financial institutions cannot “blindly” stop offering loans to them or even recalling loans, Zhou said, adding that the regulator will issue guidelines on supporting private firms this week.

He also poured cold water on market chatter that official policies are giving less importance to the role of the private sector in the economy. That echoed recent comments by Vice Premier Liu He that talk of the advancement of State firms at the expense of private firms was “one-sided” and “wrong.”

The regulator will encourage financial innovations in an orderly way and take steps to fend off systemic risk, but will “severely” crack down on Ponzi schemes disguised as financial innovations, Zhou said.

Zhou also said China will maintain a prudent stance on monetary policy and ample liquidity.

Premier Li Keqiang said earlier this month that loans to small firms should not be “willfully withdrawn,” and China should help small firms tackle their liquidity difficulties.

China will adopt more targeted measures to boost the financial sector’s support for the real economy and tackle financing difficulties for small and micro businesses, the State Council has decided.

Major commercial banks were called upon to cut their average lending rate for small firms by 1 percentage point in the fourth quarter, compared with the first quarter, and remove unnecessary procedures and surcharges for financing, Xinhua reported.

By the end of September, outstanding loans for micro and small firms hit over 33 trillion yuan, up 11.4 percent year on year.

Collateral that qualifies for use in the medium-term lending facility will be expanded to cover loans for small firms with a credit quota of up to 10 million yuan per company.

Financial institutions will be encouraged to make SME lending part of their internal performance evaluations and provide incentives to do so, the Xinhua report said.(SD-Agencies)