(Yicai) April 8 -- China’s central bank has set up a CNY500 billion (USD69 billion) relending facility to support technological innovation, tech transformation, and equipment renewal.

The one-year loans will have an interest rate of 1.75 percent and can be extended twice, the People's Bank of China said yesterday. The relending program will offer the loans through 21 financial institutions, including policy banks, state-owned commercial banks, and joint-stock commercial lenders.

When the financial institutions apply for a loan, the PBOC will provide them with 60 percent of the amount applied for if the loans meet the requirements, the central bank pointed out.

The loans will guide the financial institutions to issue credit loans to small and medium-sized tech firms in the startup and growth stages as well as digital, smart, high-end, and green technical reform and equipment renewal projects, the PBOC noted.

The 1.75 percent rate provides the financial institutions with low-cost and steady funding, guiding them to lift support for innovative tech firms, Dong Ximiao, chief researcher of China Merchants Bank-China Unicom Consumption Finance, told Yicai.

The PBOC previously set up relending facilities for tech innovation as well as equipment upgrading and renovation in April and September 2022, respectively. The latest program is CNY100 billion bigger than those combined, while the interest rate, extension arrangement, and eligible recipients are the same as before.

The balance of structural monetary policy tools was CNY7.5 trillion (USD1 trillion) at the end of last year, according to the PBOC’s website. 

Editor: Martin Kadiev