The People’s Bank of China plans to create an anti-poverty re-lending program to pump funds into local financial organizations, it said on Friday.
Focusing on local rural banks in poor counties, the central bank said on its website that it will provide low-cost loans that can be used for up to five years.
The PBOC and six other government agencies issued guidelines on Wednesday that encouraged financial institutions to increase credit support for poverty relief programs through relending. Relending is when the central bank extends loans to commercial banks on the condition that they in turn lend to businesses in required sectors.
The guidelines added that if the poverty relief programs need more credit support, the tolerance for non-performing loans (NPL) in poverty-stricken areas could be raised.
The government has named poverty reduction as one of its top priorities for the next five years. It has vowed to help the remaining 70 million people living below the poverty line of 2,300 yuan ($353) in annual income rid themselves of poverty and access essential social services by 2020.