BEIJING, February 5 (Xinhuanet) -- A finance program has been
proposed to the People's Bank of China (PBOC) to allow a wider
fluctuation range of current lending interest rates to small and
medium-sized enterprises, says the Tuesday-published China Daily.
   The proposal was made by a leading international consulting
firm in micro and small enterprise finance, and has yet to be
approved by PBOC, China's central bank, says the paper.
   The program would ensure China's small and medium-sized
enterprises (SMEs) have an easier time obtaining bank loans for
business expansion, by making this financial service more
profitable to banks.
   It proposed that China's commercial banks could charge higher
lending rates and secure larger net interest margins, to offset
the higher costs and risks involved in making SME loans.
   According to the paper, specialists invited by the World Bank
and the PBOC are now conducting a feasibility survey in Beijing to
prepare for the implementation. And some domestic financial
institutions will be carefully selected to test the new program.
   China's existing narrow interest rate margins were considered a
major constraint for banks lending to SMEs. And commercial banks
could not make handsome profits from SME lending, which is more
costly than lending to large State-owned enterprises.
   Considering China's still tight restrictions in interest rates,
the paper says that the 30 percent increase for SME lending is not
sufficient to make it a profitable financing service. Enditem