China will encourage banks to lend more to companies with registered capital lower than 5 million yuan ($761,000), caijing.com.cn reported late Wednesday, citing Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC).

Related readings:  Regulator calls for more financial support for small  New loans to rural areas assured

The CBRC will improve the regulatory policies and external environments in order to promote financial services to small-sized companies, Liu said. Further cooperation with other departments was also needed, he added.

The regulator will set up a series of differentiated supervision policies to handle matters in terms of risk tolerance and due diligence disclaimers, it reported.

As of 2010, outstanding loans to small-sized companies in China amounted to 7.27 trillion yuan ($1.1 trillion), 1.8 trillion yuan of which was in newly added loans, the report cited data from CBRC as saying.

Sources from the CBRC told reporters that the regulator is mulling over policies to insure the loan growth rate to small-sized firms, which would be higher than the average growth rate of all loans in this year. The loan growth rate to small-sized companies was 10.37 percent higher than the average rate in 2010, it said.