China's Ministry of Finance, together with the National Financial Regulatory Administration, the Ministry of Agriculture and Rural Affairs and the People's Bank of China, issued a notice shifting the existing microcredit for people lifted out of poverty into a reconfigured “support microloan” scheme after the transition period, to target households at risk of falling back into poverty and others needing continued support. The scheme provides household-based loans of up to CNY 100,000 with terms of up to three years, without collateral, and with a contract interest rate set by banks and fixed for the term. Central fiscal funds will subsidise 70% of the loan interest rate, capped at 2.5 percentage points, with local governments able to add subsidies and guide borrowers to bear part of the interest. Subsidised loan amounts are generally capped at CNY 50,000, with scope to raise the cap to CNY 100,000 where borrowers have genuine larger production and business expenditure needs. Use of proceeds is restricted to production and business purposes and cannot be used for non-productive spending or diverted to enterprises through equity participation, on-lending or similar arrangements; eligibility includes no major adverse credit record, bank rating and credit approval, and an indicative age range of 18 to 65. Banks are directed to strengthen specialised delivery, including internal resource allocation, streamlined credit processes and use of financial technology models, and to refine due diligence safe-harbour arrangements in line with existing inclusive finance guidance. Loans may be rolled over or extended once, including certain transition-period loans maturing after the transition if they meet the new conditions. Supervisors will apply differentiated treatment, including not deducting supervisory or internal assessment scores where the non-performing loan ratio is within three percentage points of the bank’s overall NPL ratio, and not downgrading risk classification solely due to compliant renewals; existing contracts signed before the notice or during the transition period up to 31 December 2025 remain unchanged for their contractual term.

Original source View in tracker