(Yicai) Aug. 13 -- China has unveiled an interest subsidy for personal consumer loans to boost domestic consumption, with a CNY3,000 (USD420) cumulative subsidy limit per borrower at designated lending institutions.

Residents can receive the subsidy if they use personal consumer loans (excluding credit cards) issued by designated institutions from Sept. 1 this year to Aug. 31 next year, but need to use the funds for consumption and transactions musts be traceable, according to a policy document jointly issued by the Ministry of Finance, the People's Bank of China, and the National Financial Regulatory Administration yesterday.

Eligible purchases include single transactions below CNY50,000 (USD6,965), with single transactions of CNY50,000 or more allowed only if related to autos, elderly care and childbirth, education and training, sightseeing, home furnishing and decoration, electronic products, and healthcare, the document said.

Such subsidies can directly reduce residents' consumer credit, enhance their willingness and ability to use financial leverage to spend more, improve living standards, and stimulate effective financing demand from lenders and residents, Dong Ximiao, chief researcher of Zhaolian Consumer Finance, told Yicai.

According to the document, one percentage point of the annual interest on loans will be subsidized, not exceeding 50 percent of the contractual interest rate. The central government will cover 90 percent of subsidy funds, with provincial governments providing the rest.

Six big state-owned banks, 12 national joint-stock lenders, and five consumer lenders will serve as qualified lending institutions.

The new interest subsidy policy can reduce consumers' costs of purchasing cars, boosting related sales, Cui Dongshu, secretary-general of the China Passenger Car Association, said to Yicai.

Editors: Tang Shihua, Martin Kadiev