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July 31, 2009

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City increases credit to small business

BANKS in Shanghai have increased loans to small businesses by 20 percent in the first half of this year as the lenders seek to diversify income channels.

Commercial banks in the city lent 28.68 billion yuan (US$4.2 billion) to small businesses in the first six months, accounting for 17.96 percent of the total new credit in the period, said the Shanghai Bureau of the China Banking Regulatory Commission.

The local banking regulator said the growth in loans to small businesses was higher than the expansion of other types of credit, without giving detailed comparison.

The manufacturing, wholesale, retail and construction industries received most of the loans in the small business sector.

Banks in Shanghai are increasing credit support to the small business segment amid a higher interest margin and also on the government's call to boost the local economy lending to small enterprises.

Lenders such as the Bank of Communications and Ping An Bank have set up small business centers to cater to the needs of small, and mostly private, businesses.

Other banks, including the Bank of Shanghai and Shanghai Rural Commercial Bank, are also awaiting regulatory approval to set up small business centers.

The local regulator also noted the risks the small businesses face as the economic rebound has still not been cemented.

The small firms also bear higher risks for banks which are reluctant to offer them credit as their credit-worthiness is difficult to assess due to the lack of credit records.


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