A company from Foshan, Guangdong province, displays its sunglasses, designed specially for drivers, at an expo of small and medium-sized enterprises in Guangzhou. [Photo/China Daily]

BEIJING - The China Banking Regulatory Commission (CBRC) on Tuesday announced a series of favorable policies for lenders to offer more loans to small-scale enterprises.

The move is designed to alleviate the financial pressure on smaller businesses against the background of the nation's monetary-tightening policies.

According to the new regulations, a lower risk weighting (25-percentage-point less) will be applied when calculating the capital-adequacy ratio for loans of less than 5 million yuan ($772,000) to each individual small enterprise.

The CBRC's move came after the country became caught between sliding industrial output and rising inflation. Analysts have said that small businesses in some coastal areas are currently in a worse situation than at the height of the global financial crisis in 2008. That's mainly because of measures such as interest rate rises and the increase in reserve requirement ratios for lenders, which are intended to soak up liquidity and combat inflation.

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China's purchasing managers' index, a key gauge of manufacturing activity, hit a nine-month low of 52 in May, while the consumer price index (CPI) is forecast to come in at 5.5 percent year-on-year in the same month, the fastest pace since July 2008.

The central bank has raised interest rates four times since October, and has also increased the reserve requirement ratio for banks eight times over the same period to a record 21 percent for major lenders.

The regulators will no longer include loans to small businesses in their calculations of lenders' loan-to-deposit ratio, said Xiao Qiyuan, director of the CBRC's second supervisory division.

In addition, it will conduct differentiated standards of non-performing-loan ratios among banks and raise tolerances to allow banks to accrue a larger ratio of non-performing loans to small enterprises, mainly because these loans usually have higher risks, he said.

Banks are also being encouraged to set up separate branches specializing in providing financial services for small-scale enterprises, and to issue bonds to provide loans for small businesses.

"These policies came at the right time, and the market-oriented rules will make lenders more willing to lend their limited credit resources to small businesses," said Zhang Zhiyong, general manager of the Small- and Medium-Sized Enterprises Business Department at Bank of Beijing Co Ltd.

The new rules are likely to raise the capital-adequacy ratio of listed banks by about 0.9 percentage points, while reducing the pressure of the loan-to-deposit ratio, said Chen Jiangang, an analyst at Sinolink Securities in a research note. He added that Bank of Nanjing Co Ltd, China Construction Bank Corp, China Minsheng Banking Corp Ltd and Bank of Ningbo Co Ltd will witness the biggest increase in the capital-adequacy ratio.

Ma Jun, the chief economist at Deutsche Bank Greater China, said a "hard landing" for the world's second-largest economy is avoidable and that the tight monetary policies will probably start to ease after the third quarter, once CPI growth has hit his forecast peak of 6 percent in June.

Xiao said that, despite the government's tightening policies, outstanding loans to small businesses had reached 9.45 trillion yuan by the end of April, a rise of 7.1 percent since the start of the year and accounting for 28.8 percent of total outstanding loans. The pace is 0.6 percentage point faster than the credit growth during the period.

At the same time, non-performing loans to small businesses declined 14.7 billion yuan from the start of the year to 239.5 billion yuan. Meanwhile, the ratio of the non-performing loans declined by 0.37 percentage point to 2.61 percent.