Financial institutions encouraged to support tech in Anhui

The banking and insurance regulator guided financial institutions to strongly support strategic emerging industries, advanced manufacturing and technology companies in Anhui province, particularly in fields such as chip manufacturing, equipment manufacturing and artificial intelligence.

In the first nine months of 2019, outstanding loans for technology companies exceeded 150 billion yuan ($21 billion) in Anhui, up 33.42 percent year-on-year. The loans supported 7,350 tech firms, a 9.27 percent increase from the previous year.

Over the same period, outstanding loans supporting strategic emerging industries in the province increased by 22.45 percent year-on-year, 16 percentage points higher than the growth of loans to the manufacturing industry, according to the China Banking and Insurance Regulatory Commission Anhui Office.

The regulator promoted the establishment of a provincial financing guarantee company for tech firms. The company will repay 30 percent of an outstanding balance on behalf of a tech firm in the event of default. The rest of the loan repayment will be shared among a government-funded financing guarantee company at the level of a city, county or district (40 percent), the relevant bank (20 percent), and the local bureau of finance (10 percent).

"Technology companies that obtained loans through this mechanism were charged guarantee fees at a rate of no more than 1 percent," said Yu Lin, deputy director of the CBIRC Anhui Office, at a news conference on Thursday.

The regulator promoted the launch of a provincial-level venture capital fund to support technology companies at the early stage and the growth stage. It also encouraged banks to explore innovative business such as intellectual property pledge, a financing activity in which enterprises pledge their intangible assets including trademarks, patents and copyrights to obtain funds.

"Our tolerance for tech firms' non-performing loans is 3 to 4 percentage points higher than the average NPL ratio. In addition, we implemented a policy which made clear that bank employees would not be held responsible for defaults on loans to technology companies once they conducted proper due diligence," he said.

Hu Weiyi, president of the Industrial and Commercial Bank of China Anhui Branch, said the State-owned commercial lender made institutional innovation to meet the demands for innovative financial services in the province.

"For technology companies, we make decisions on credit grants mainly based on their market deployment and our judgment of their growth potential and value in the future. It is quite different from granting credit to traditional companies based on our evaluation of their cash flow and collateral," Hu said.

The bank offered comprehensive solutions including financing, settlement, wealth management and foreign exchange services. Its Anhui branch also provided financial services to 29 companies listed on the "new third board", a national share transfer system for small and medium-sized enterprises, through equity investment and mergers and acquisitions, he said.