The new requirement of banks’ lending to private enterprises, the so-called “one two five” goal, will not be an actual assessment target for each bank, but a directional requirement for the entire industry, said a banking regulator, Securities Daily reported.
The regulator said no specific target will be proposed for an individual bank, nor will they require every bank to meet the goal.
Last week, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said regulators are considering setting targets, the “one two five” goal, for banks.
For large-scale banks, lending to private companies should not be less than 1/3 of their new corporate loans, while that of small and medium-size banks, the proportion should be no less than 2/3.
The policy aims to establish that no less than 50% of banks’ new corporate loans will be given to private enterprises over the following three years, Guo said.
Some people believe that once that goal becomes an assessment indicator for banks, it will distort the bank’s commercial lending behaviour.
Since the non-performing rate of private enterprise loans is usually higher than the industry’s average level, over-emphasis on increasing loan support to private enterprises will bury risks on the asset quality of banks.