China may increase tolerance for small firms' bad loans-Securities Times

SHANGHAI, March 12 (Reuters) - China may increase its tolerance for non-performing loans at small companies in order to help spur their growth, the state-backed Securities Times newspaper quoted a senior official from the banking regulator as saying on Tuesday.

Chinese banks have been wary of lending to smaller firms with higher credit risks, preferring state-backed customers. But authorities have been urging lenders to help keep cash-strapped private firms afloat to help support the slowing economy.

Zhou Liang, a vice chairman at the China Banking and Insurance Regulatory Commission (CBIRC), made the comments to the newspaper on the sidelines of an annual parliamentary meeting. He said the move might be made this year, without giving further details.

He also told the newspaper that while financing support for these small and micro firms had improved, it still fell short of market demand.

China’s central bank chief said on Sunday that lending rates for small firms were still relatively elevated due to high risk premiums and that the country will push ahead with interest rate reforms interest rates to resolve the issue. (Reporting by Brenda Goh; Editing by Kim Coghill)