CBIRC: Banks Required to Make Dedicated Credit Plans for Intellectual Property Pledge Financing

Yang Liping, chief inspection officer of China Banking and Insurance Regulatory Commission (CBIRC), said banks would be required to make dedicated credit plans for intellectual property pledge financing, establish dedicated assessment and incentive mechanisms, and strengthen intellectual property pledge financing.

According to Yang at a press conference held by the State Council Information Office of China on July 4, in recent years, great headway had been made in commercial banks’ efforts to expand intellectual property financing by making relevant arrangements in institutional structure. By the end of the first quarter of this year, 6,448 banking institutions received intellectual property pledge financing, an increase of more than 1,200 over 2018, and loan balance increased by 98% compared with the beginning of 2018.

She said that at present, intellectual property pledge financing still faced many problems, such as difficulties in valuation, less effective application of most intellectual property in other enterprises, and inconvenient rights registration and inquiry.

She said that commercial banks would be encouraged to explore portfolio models of intellectual property pledge, so as to help more small and micro enterprises to receive their first intellectual property pledge financing and improve their ability and risk tolerance. Commercial banks were also urged to strengthen capacity building of asset valuation and explore effective ways to deal with pledged property.

According to Yang, by the end of May, the loan balance of private enterprises reached 40 trillion yuan, up 5.8% compared with the beginning of the year. The newly issued loans for private enterprises in the first five months accounted for 51.48% of all loans newly issued for enterprises. In terms of preferential loans for small and micro enterprises, the balance totaled 10.25 trillion yuan, an increase of 9.55% over the beginning of the year and 3.61 percentage points higher than the growth rate of various loans.

In response to the question of whether there would be a crowding-out effect on customers of small and medium-sized banks given that large banks were focusing on small and micro finance, Yang said that at present, the coverage ratio of loans for enterprises with tax returns was 26%, leaving a large space for small and micro finance. 55% of preferential loans for small and micro enterprises came from local small and medium-sized banks, which were major sources of loans for small and micro enterprises.

She said that moderate competition could help banks improve their services. The catfish effect of big banks could make the market more dynamic and help sink small and micro enterprises. The CBIRC would continue to guide large, medium and small banks to give full play to their strengths to create a differentiated service landscape with complementarity and healthy competition.

September 1, 2019

Source: Xinhua News Agency

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