South China’s Guangdong Province is extending its credit database for small and medium-sized enterprises (SMEs) to give them improved access to bank loans.

The Guangzhou branch of the People’s Bank of China, which is in charge of the project, said it will input the credit information of 360,000 SMEs, two-thirds of the province’s total, into the database by the end of the year.

The figure does not include firms in Shenzhen, which are not covered by the Guangzhou branch.

Branch vice governor Xu Nuojin said the companies to be included are those that have been officially registered but not yet been involved in a credit relationship with a commercial bank.

Their basic information, legal status, business details and financial status will be recorded on the database.

Information about their tax payments and utility fees will be added later, said Xu.

“For several reasons, SMEs face many more difficulties in raising funds. The database is expected to play the role of credit archives of the SMEs so that they get easier access to loans from commercial banks,” he explained.

“In turn, the banks will be able to get a clearer picture of the firms applying for loans, so the whole process can be speeded up.”

Xu said all credit information will be kept strictly confidential and only authorized institutions with valid requirements will be able to access it.

“Banks will be subject to varying penalties if they inquire about information illegally and use it for any purpose other than that which is authorized.”

Li Qingqing, an associate professor with South China Normal University’s economics department, said the credit database will benefit both SMEs and banks.

“It will be easier for SMEs with good credit records to raise funds and it will be easier for commercial banks to spot potential customers,” she noted.

As one of the nation’s 17 pilot provinces and cities selected to set up an SME credit database, Guangdong had submitted information on 11,203 SMEs last year.

Since then, 1,508 businesses have been approved for credit extension loans, while a further 336 have actually received funds.

China began to promote the construction of SME credit databases in 2006. Information relating to more than 140,000 SMEs across the nation has been added, with over 10 percent of them having received either credit extensions, loan intentions or loans.

Source :chinadaily.com