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| Sunday, 4 September 2005 |
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Business |  |
| News Business Features Editorial
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ADB promotes private lending to SME firms in PRC SHANGHAI, PEOPLE'S REPUBLIC OF CHINA - The ADB has signed a loan of $32.5 million and Euro 2.5 million for Business Development Bank Limited (BDB), a wholly foreign-owned bank in PRC, for BDB's expansion of lending to small and medium-sized enterprises (SMEs). The German Development Bank, Kreditanstalt fur Wiederaufbau (KfW), co-arranged the facility. "ADB's participation would serve as a catalyst for BDB to successfully secure additional equity, new debt funding from other lenders, and ultimately a yuan-business licence," says William Willms, an ADB Principal Investment Officer. "It will support SMEs which play a significant role in the PRC economy and are key drivers of employment, economic growth and development." At present, the BDB extends mainly dollar-denominated loans to medium-scale enterprises requiring dollar financing in Shanghai and nearby coastal provinces. It is also permitted to conduct limited yuan business with foreign enterprises in specified major cities. BDB plans to expand its lending to SMEs, while maintaining a healthy capital adequacy level. It also plans to increase its capital base, and obtain a broader yuan-business licence and subsequently tap into more yuan funding to provide local currency loans to local SMEs. More than 80% of PRC's SMEs have difficulty accessing financial services and securing financing. Dollars and other major foreign currencies are needed by exporting and importing SMEs which have foreign currency-denominated nvoices. Given the undergoing historic transformation of PRC's banking and financial sector, ADB's involvement will support the promotion of a stronger credit culture and competitiveness in the banking and financial sector as a whole to prepare for upcoming market shifts, such as interest rate liberalisation, local currency operations for foreign banks and surging credit demand from SMEs. Courtesy: ADB |
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