How to balance the dilemma of lending and supervision during the epidemic

"China News Weekly" reporter / Zhao Yiwei

Published in "China News Weekly" No. 6 in 2020

One week after the resumption of work, Chen Hai, the owner of the chemical plant, is applying for a special anti-epidemic loan of 3 million yuan from the local rural commercial bank. This chemical factory, which is operating at full capacity to produce disinfection water, was originally mainly engaged in the production of beauty cosmetics, and disinfection water originally accounted for less than 10% of the total production.

Chen Hai's factory is lucky. Disinfection water production qualifications and production lines that have been retained in the past are the key to resumption of work. Resumption of work means that there is revenue, although not necessarily profitable, but at least the capital can be guaranteed. If the application for an epidemic-resistant loan to send charcoal in the snow is successfully applied, Chen Hai's factory can maintain production operations for at least 2 to 3 months.

The good news is that since January 26, the central bank and the CBRC have successively introduced a number of financial support policies and measures, and differentiated preferential financial credit support is being implemented in various places. According to regulations, this batch of special credit support set up in response to the epidemic situation is mainly targeted at some key epidemic areas and precisely supports enterprises that produce important medical articles and living materials.

"As of 12:00 noon on February 14, the financial support provided by banking financial institutions to fight the epidemic exceeded 537 billion yuan." At the press conference on February 15, Liang Tao, vice chairman of the China Banking Insurance Regulatory Commission, prevented the epidemic. Control and financial support is introduced as such.

Jiang Xing, a credit department manager at a local branch of a state-owned bank, presented the lists to China News Weekly. Among them, there are 4 enterprises on the national key list of epidemic prevention and control, and 41 companies on the provincial government list. The companies on these lists can apply for special anti-epidemic loans and enjoy financial discounts.

"Anti-epidemic loans only connect to companies on the national and provincial lists, and local governments have no approval authority." Jiang Xing told China News Weekly that special anti-epidemic loans were strictly linked to the list, and companies outside the list could not apply. Localities cannot also add on their own, "to ensure that the credit needs of companies on the list are met."

The reality outside the list is that the broader SMEs that have been severely affected by the epidemic, because production activities are not directly related to medically necessary supplies, still face the dilemma of difficult operation and difficult loans. More local banks and financial institutions are also undergoing the severe test of a sharp increase in pressure on risk control and a rising non-performing rate.

"Small and medium-sized enterprises in trouble are like patients, and local banks are like doctors. Doctors cannot treat patients at the expense of themselves." Bai Chengyu, executive vice-chairman of China Microfinance Alliance, made an analogy to China News Weekly. For example, there are more patients, and hospitals need to be better protected. There are more companies with survival crises, and banks must adhere to risk control standards. "

"In special times, all industries and industries need financial support, and banks also face more severe pressures on risk management and control." He Ping, director of the China Institute of Finance, Tsinghua University, also told China News Weekly, "The government needs to introduce funds from all aspects Forces, especially government funds, use a variety of methods and channels to take risks and losses together and reduce the pressure on the banking system. "

Watch out for credit risk

In the industrial park of hundreds of small, medium and micro enterprises in Huadu District, Guangzhou where Chen Hai is located, there are very few factories that have successfully resumed work, and even fewer can apply for anti-epidemic loans. More small and medium-sized enterprises without production qualifications for protective materials are filling the deficit of zero revenue while delivering high rents and wages.

"It was only individual companies that were rescued. It was more struggling in the waves, not even a life buoy." The owner of a crafts factory told China News Weekly that the special anti-epidemic loan was limited to protective material production enterprises. Ordinary enterprises cannot apply. "It seems that both burden reduction and support have nothing to do with ordinary enterprises."

In order to find possible support policies, Zheng Hao carefully studied the "16 warm enterprises" and "21 benefit enterprises" issued by the company's registered place in Tianjin.

"Finally, no one touched." Zheng Hao reluctantly told China News Weekly that his company is an information service. It has a scale of more than 100 people and has a fixed expenditure of nearly 4 million yuan per month, but Because there are no fixed assets, it is difficult to obtain loans from banks. "Finding acquaintances and small loan companies is still the main way of borrowing."

This is not the case. After the epidemic, many local governments have introduced policies for supporting small and medium-sized enterprises, such as “Tianjin 21”, Guangzhou 15 and Fujian 21 Major measures such as rent reduction and exemption.

In the eyes of many small, medium and micro enterprise bosses, the current policies to support small and medium-sized enterprises are "useless", and according to this policy, "there is still a dead end."

"Deferred delivery is not exempt or less paid, social security pressure is only slightly delayed, and has not decreased." Many business leaders told China News Weekly that most of them have no fixed asset mortgages, cannot open businesses, and have no operating cash flow. Mortgage small and medium-sized enterprises are still difficult to obtain loans from banks. At the same time, the proportion of directly renting state-owned properties is too small, and the majority of ordinary small and medium-sized enterprises cannot enjoy rent reduction.

In addition, due to the transmission of up and down risks in the industrial chain, some industries are experiencing a trend of credit risk transmission.

"Taking export-oriented foreign trade enterprises as a typical example, if the risk of a backbone company increases, the small and micro enterprises in the relevant industry chain will be affected to varying degrees." Jiang Xing, a credit department manager of a local branch of a state-owned bank, told China News Weekly ”When enterprises are generally facing operational difficulties, the amount of orders in the future is an important factor in judging the production capacity of the enterprise." But the current situation is that in addition to the production of protective materials and daily necessities, companies have more stable domestic orders, other companies The order volume has basically declined sharply, and the financial status and expectations are not optimistic. "

According to a questionnaire survey conducted by Tsinghua University and Peking University in a joint survey of 995 SMEs, according to the current financial situation, 85% of companies maintain a maximum of 3 months, and 22.43% of companies plan to reduce their costs by reducing staff and salaries.

"Redundancies are broken arms, but they are not a long-term solution." A person in charge of an information technology company told China News Weekly that "there is no longer work, no money can be borrowed, and the enterprise is a dead end."

Improve regulatory tolerance

On February 15, Liang Tao, vice chairman of the China Banking Regulatory Commission, said at a press conference of the joint prevention and control mechanism of the State Council that the objective impact of the epidemic will be fully considered and the regulatory tolerance will be appropriately increased.

This means that the prevailing survival pressure of enterprises has been transmitted to financial institutions, and the sudden increase in repayment difficulties has caused pressure on banks to meet regulatory standards.

"In a certain period of time, the operating environment of banks has suddenly changed, especially under the influence of force majeure, and banks will be under pressure to meet regulatory targets." Liang Tao said that the CBRC will deal with banks in areas affected by the epidemic that are more severe. Take a realistic attitude, fully consider the objective impact of the epidemic, appropriately increase regulatory tolerance, give a certain grace period for regulatory indicators to meet standards, or make some flexible arrangements on regulatory measures.

According to the regulations, the decentralization of special anti-epidemic loans is only carried out in state-owned banks and some local banks in designated regions, and it is strictly linked to enterprises on national and provincial lists. However, after the epidemic, many local rural commercial banks have actively promulgated loan support policies for small, medium and micro enterprises even if they do not need to undertake the work of issuing special loans for the national epidemic.

"Now all regions are still under strict control, and the companies that can resume work are related to the production of epidemic prevention materials, and the number is very small." A head of the credit department of a local rural commercial bank told China News Weekly that because special loans are only available in seven regions, local Banks have no special restrictions on general loans to small and medium-sized enterprises, but will prioritize the companies involved in the epidemic prevention and those with cash flow. "We put the income next, and risk control has been relaxed compared to before."

In fact, the practice of local banks actively issuing loans during the epidemic period is quite controversial within the industry.

"Conceptually, the awareness and responsibility of financial institutions for the current epidemic are absent or misplaced, and most of them only know the trend, obedience, and obedience." The person in charge of the above-mentioned rural commercial bank bluntly stated that, as far as the current situation is concerned, banks will continue in the first half Such a loan policy "is a manifestation of lack of self-thinking, self-awareness, and lack of responsibility."

"Enterprises are generally experiencing difficult times, and banks can't relax risk control." Bai Chengyu, executive vice chairman of China Microfinance Alliance, told China News Weekly. "A financial institution should always maintain its existing internal control and risk management. In principle, you cannot lose sight of this. "

In the loan support policies issued by multiple local banks, the preferential rate is usually a 5% to 10% decrease in the basic interest rate of the loan, which is lower than the normal business loan interest rate of the enterprise.

"The pressure on local banks is increasing." He Ping, director of the China Institute of Finance and Economics of Tsinghua University, told China News Weekly that in the current situation, on the one hand, banks are facing more severe pressure on risk management and control; on the other hand, in order to To avoid amplifying the negative impact of the economy, banks may have to make certain benefits.

Among industry organizations of financial institutions, attempts to find the next response have been launched.

"Everyone's consensus is to provide effective financial services for Xiaowei while the institutions themselves are alive." Just after finishing an online seminar with more than thirty lending institutions, Bai Chengyu told China News Weekly "The problems that financial institutions generally face are mainly two aspects. One is that there are a large number of companies with difficulty in repaying, and the other is that many enterprises still have new loan needs during the resumption period.

Bai Chengyu suggested that various types of local banks, small loan companies, and Internet finance companies can organize businesses to collaborate and provide coordinated and combined financial services for key enterprises and small and micro enterprises in an industrial chain. "Collaborative classified financial services can drive the rapid recovery of various enterprises in the entire industry chain."

"Banks can cooperate with other financial institutions (including financial companies, guarantee institutions, small loan companies, investment funds, etc.) to design a reasonable priority and inferiority mechanism, a combination of stock and debt, share and reasonably allocate risks, and jointly serve SMEs. He Ping, director of the China Institute of Finance and Economics at Tsinghua University, told China News Weekly that, in addition to private power, banks can also actively introduce special government guarantee agencies or rescue funds set up by the government to share some losses and reduce the pressure on banks' performance.

Call on the government

When liquidity pressure becomes a common problem for companies and banks, calling on the government to play a bigger role is becoming a consensus on both sides.

On the one hand, it is to reduce the social security burden of enterprises, control the proportion of layoffs and stabilize employment.

"The most practical policy is to reduce the company's social security, provident fund rates or short-term exemptions." Zheng Hao, head of a medium-sized information service company, admitted to China News Weekly that most places now have a social security delay policy, but This is still a payable. "Even if the payment is delayed for 3 months, the enterprise has not emerged from the shadow of the epidemic and will still be overwhelmed by the money."

"Deferred social security provident fund cannot really encourage companies to not lay off employees. Short-term reduction of rates or short-term exemption may be more appropriate." He Ping said that some industries will rebound rapidly after the epidemic, and the loss of performance can be restored, and the deferred payment policy can reduce the burden. ; And some industries after the epidemic, lost performance can not be recovered, and it takes some time to resume normal operations, these industries are more appropriate for relief.

He Ping suggested that the combination of reduction and exemption and employment protection could be considered, and layoffs should be linked to subsidies. For enterprises with outstanding employment protection, lower short-term rates could be provided.

From international experience, there have been good precedents for reducing the social security provident fund rate.

In Singapore, the social security provident fund system has always implemented a flexible rate system. During the period of economic prosperity, the national income increased relatively, and the government raised fees and restrained consumption. In times of economic contraction, the rate of fees is relatively reduced to encourage national consumption. After passing through the difficult period, restore the normal payment ratio to encourage enterprises to retain employees, overcome difficulties, and resume production as soon as possible. This has happened many times in Singapore history.

On the other hand, it is the bank that introduces government funding to bear financial risks and losses together.

"At present, the government has not adopted a special incentive mechanism to encourage banks to provide credit to small, medium and micro-sized enterprises." Bai Chengyu told China News Weekly that the government can adopt practices such as discounting interest rates to guide financial institutions to provide financial services to industries that the government hopes to support. .

"Banks need to grasp two principles when they introduce government funds." He Ping told China News Weekly. First, the government should give priority to losses incurred by financial institutions in the process of bailout of the market, and they can then be reasonable through various means. Allocate to various stakeholders, such as through future taxation; second, the short-term economic measures used by the government during special epidemic periods need to design a suitable exit mechanism.

He Ping suggested that the government could set up a special guarantee institution or rescue fund to take risks and losses together with market-oriented financial institutions through a variety of methods and channels, including guarantees, rescue loans, and equity investments.

"Under special times, it is difficult for banks to independently bear such risks and losses, and it is necessary for all kinds of financial forces, mainly government, to share them." He Ping told China News Weekly. "On the one hand, the future of SMEs and on the other hand, banks Government's risk control is the key to balance in the middle. "

(At the request of the interviewee, Jiang Xing, Chen Hai, and Zheng Hao are aliases in the text)

Disclaimer: Publication of "China News Weekly" manuscript is authorized in writing