OREANDA-NEWS. September 10, 2014. In order to implement the decision adopted at the Executive Meeting of the State Council to increase agro-supporting and small and micro enterprise-supporting central bank lending and discount, and to build financial sector’s capacity to provide services to the agricultural sector, rural areas, farmers and other weak links in the economy, the PBC has decided to increase the agro-supporting central bank lending quota of selected branch offices by 20 billion yuan to guide rural financial institutions to increase agro-lending, and to adopt effective measures to further step up agro-supporting central bank loan management to effectively reduce the financing cost of the agricultural sector, rural areas, and farmers.

First of all, the management of agro-supporting central bank loans will be enhanced. During the duration of an agro-supporting central bank loan, the amount of new agro-loans of the recipient rural financial institution shall be no smaller than the agro-supporting central bank loan it has borrowed. Secondly, there will be measures to guide rural financial institutions to lower interest rates of agro-loans. The agro-supporting central bank loans will be provided with concessional interest rates. Qualified rural financial institutions in the poverty-stricken areas will enjoy a further reduction of 1 percentage point from the concessional interest rates when borrowing agro-supporting loans from the central bank.

Therefore, the agro-loans extended by a rural financial institution using agro-supporting central bank loans it has received should be lower than the weighted average interest rate of agro-loans of the same maturity extended by the financial institution. Thirdly, the efficiency of agro-supporting central bank lending will be improved. The central bank will make good use of the new agro-supporting loans and revitalize the stock of agro-supporting assets to optimize the regional structure of the quota of agro-supporting central bank loans. Fourthly, there will enhanced monitoring and evaluation on how the agro-supporting central bank lending has helped reduce the financing cost of the agricultural sector, rural areas, and farmers. Monitoring and scrutiny of the ultimate recipients of the agro-supporting central bank loans and interest rates of agro-loans will be enhanced to make sure that the agro-supporting central bank lending serves to reduce the financing cost of the agricultural sector, rural areas and farmers.