(Yicai) Oct. 31 -- China's central bank plans a one-time credit relief measure that would hide small defaults since the Covid-19 pandemic on the credit reports of borrowers who have since repaid the debts.

The People's Bank of China plans to implement the measure early next year, Governor Pan Gongsheng said at the Annual Conference of the Financial Street Forum that ended yesterday. Each individual can apply to have their credit standing reset only once, he pointed out.

The move will not remove negative entries from credit records, but will not display the previous defaults, preserving the underlying data for possible future review while preventing minor pandemic-era defaults from causing long-lasting credit harm to individuals, Pan said.

The measure should both encourage borrowers to repay existing debts sooner and help improve access to personal financing, Ming Ming, chief economist at Citic Securities, told Yicai.

It offers a reset for those whose defaults were non-malicious and who have since repaid their debts, allowing them to more quickly resume normal financial activities and become eligible once more for mortgages and other borrowing, said Liu Xinhai, vice president of the Beijing Credit Society.

Credit is the foundation of consumption and investment, Liu explained. The restoration of credit records for consumers means that more potential homebuyers, entrepreneurs, and small and micro business owners will regain access to financial support, he added.

The measure will also help banks recover more overdue loans and improve asset quality, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. Moreover, returning those who have restored their credit into the pool of serviceable customers will help financial institutions to expand their customer base with growth potential, he noted.

Editors: Tang Shihua, Futura Costaglione