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(Yicai Global) Dec. 20 -- The People's Bank of China has brought in a new type of lending facility to encourage banks to loan cash to small businesses and the private sector.
The central bank began accepting applications yesterday from qualified banks who wish to use the new tool, called a targeted medium-term lending facility, to obtain stable, long-term funding to support their business units working with small and private companies.
Large commercial, joint-stock and commercial banks in major cities that lend heavily to the real economy and meet macro-prudent requirements can apply for the TMLF, which has a maximum term of three years at an annual interest rate of 3.15 percent, 15 basis points lower than the existing medium-term lending facility.
The PBOC also announced yesterday that it has increased re-lending and re-discount quotas by another CNY100 billion (USD14.5 billion), saying previous expansions, which took place in June and October this year giving a total CNY300 billion boost, had been effecting in improving financing for small, micro and private businesses.