Optimization of the debt-free loan renewal policy, further strengthening support for micro and small enterprises (MSEs) for loan renewal.

On September 24th, Li Yunze, the director of the National Financial Regulatory Administration, stated at a press conference held by the State Council Information Office that the "debt-free loan renewal" policy is highly welcomed by MSEs and will further optimize the loan renewal policy in three aspects.

First, the loan renewal target will be expanded from some MSEs to all MSEs.

MSEs with real financing needs and financial difficulties after loan maturity, if eligible, can apply for loan renewal support.

Second, the loan renewal policy will be temporarily extended to medium-sized enterprises (MSEs) for a period of three years, that is, medium-sized enterprises with working capital loans maturing before September 30, 2027, can refer to the loan renewal policy for MSEs.

Third, the risk classification standards will be adjusted.

For loans to enterprises that operate legally and compliantly, continuously, and have good credit, the loan renewal will not be downgraded in risk classification due to the renewal alone.

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On the same night, the National Financial Regulatory Administration issued the "Notice on Doing a Good Job in Loan Renewal and Improving the Financial Service Level for Micro and Small Enterprises" (hereinafter referred to as the "Notice"), which improves the financial service level for MSEs from seven major aspects.

This is a further optimization of the "Document No.

36" issued by the former China Banking Regulatory Commission in 2014 (also known as "debt-free loan renewal").

According to the First Financial Daily, the loan renewal policy can be understood as a special "borrowing new to repay old", with the special point being that according to the financial asset classification method, after "borrowing new to repay old", the enterprise's risk classification should be at least put into the "attention" category of loans.

However, for enterprises that meet the conditions and are relatively excellent, they can still be classified as normal loans, which is also the difference between loan renewal and "borrowing new to repay old".

More MSEs and medium-sized enterprises benefit from the "Notice on Improving and Innovating Micro and Small Enterprise Loan Services and Improving the Financial Service Level for Micro and Small Enterprises" issued by the former China Banking Regulatory Commission in 2014, which clearly states that MSEs that still have financing needs after the maturity of the loan can apply for loan renewal.

This also means that MSEs do not need to repay the principal when the loan matures and can continue financing, and this business is also known as "debt-free loan renewal".

The "Notice" has adjusted the loan renewal target, loan renewal risk classification, and the improvement of loan renewal due diligence exemption, etc.

First, the loan renewal policy has expanded the coverage of MSEs, benefiting more MSEs and medium-sized enterprises.

The "Notice" fully considers the actual situation and financing needs of medium-sized enterprises at this stage, and temporarily expands the loan renewal policy to medium-sized enterprises, with a period of three years.

That is, for medium-sized enterprises with working capital loans maturing before September 30, 2027, if there is a demand for capital renewal, commercial banks can handle loan renewal in accordance with the loan renewal policy for MSEs.

Industry experts said that the temporary expansion of the loan renewal policy to medium-sized enterprises is mainly considering that under the current macroeconomic pressure, some medium-sized enterprises also have some needs for renewal financing.

It is necessary to do a good job in financial support for these enterprises, which can promote better business development, and include medium-sized enterprises according to the actual situation.

In addition, the "Notice" supports commercial banks to enrich loan renewal products, optimize loan service models, improve the types of loan renewal products, and clarify that MSE working capital loans and MSE owners, individual industrial and commercial households, and farmers' business loans can all be renewed.

All MSEs that still have financing needs and temporarily have financial difficulties after the loan matures can apply to commercial banks for loan renewal support.

Commercial banks handle loan renewal according to market-oriented and rule-of-law principles, and allow MSEs to continue to use loan funds through the issuance of new loans to clear the original loans.

Du Yang, a researcher at the Bank of China Research Institute, believes that this adjustment means that more MSEs can enjoy the debt-free loan renewal policy, which will greatly increase the policy coverage and help more MSEs facing operational difficulties to obtain continuous financial support.

Policy optimization is not a relaxation of supervision.

The adjustment of risk classification standards helps to enhance the willingness of commercial banks to carry out debt-free loan renewal business.

The "Notice" stipulates that if the original loan is a normal category and the borrower meets the relevant conditions, the risk classification will not be downgraded alone due to loan renewal and can be classified as a normal category.

These conditions include operating legally and compliantly; normal production and operation, with continuous operating ability; good credit status, strong repayment willingness, no misuse of loan funds, overdue interest, and other bad behaviors; meeting the loan issuance standards, etc.

For renewal loans that do not meet the provisions of the preceding paragraph, commercial banks should carry out risk classification based on factors such as the borrower's debt repayment ability, and truly and accurately reflect the quality of financial assets.

Du Yang believes that this move allows banks to focus more on the actual business performance and credit status of enterprises, without unnecessary risk classification adjustments, thereby improving the efficiency and accuracy of credit decisions.

Furthermore, this adjustment helps to enhance customer trust, promote long-term cooperation between banks and enterprises, and promote mutual development.

However, the market is also worried that this move will lead banks to cover up non-performing assets through loan renewal policies, thereby affecting the non-performing rate of the banking industry and other aspects.

Dong Ximiao, the chief researcher of China United, said that "loan renewal business needs to prevent indiscriminate inclusion.

For some enterprises that are already very difficult to operate, have no market competitiveness in their products, and have high leverage ratios, banks should not agree to renew the loan after the loan expires.

Otherwise, for the enterprise, although it has continued its life, for the entire society, the leverage ratio cannot be reduced; for the bank, it delays the outbreak of non-performing loans."

The original intention of supervision is to benefit more small and micro enterprises and implement financial support for the development of the real economy.

Policy optimization is not a relaxation of supervision.

Banks should strengthen post-loan risk management, closely monitor the operating conditions of customers, establish a list of customers for debt-free loan renewal, increase the intensity and frequency of post-loan monitoring, and verify whether the loan payment complies with the agreed purpose through account analysis, voucher inspection, or on-site investigation.

Regularly analyze loan risks, loan quality, and the compensation ability of guarantors, and conduct timely tracking analysis, and do a good job in risk assessment and risk warning.