China urged banking institutions to cooperate with local governments to optimize policies on guaranteed loans for startups and actively provide financial services to new urban residents who are eligible to be included in the scope for support of such loans.

There are more than 300 million new urban residents in the country, according to the China Banking and Insurance Regulatory Commission. The regulator defined new urban residents as people who live in a city permanently but have not yet obtained a local hukou, or those who obtained a local hukou within the past three years. A hukou is an official document certifying that the holder is a permanent legal resident of a particular area.

The CBIRC requires banking institutions to optimize procedures to process guaranteed loans for startups and improve the financing efficiency of entrepreneurial entities, according to a recent notice of the regulator.

The China Banking and Insurance Regulatory Commission Jiangsu Office recently announced an implementation plan for the banking and insurance sectors in Jiangsu province to better serve new urban residents, making great efforts to increase their total financing and expand the coverage of insurance plans for them.

The Jiangsu provincial regulator encouraged banking institutions to open an express passage for granting credit to micro and small businesses started by new urban residents, establish mechanisms for priority acceptance and approval of loan applications and loan processing within a specified time and lower financing costs for new urban residents to start a business by cutting lending rates and reducing service fees.

Banking institutions are also motivated to give full play to local government policies, including interest rate discounts, loan guarantee programs and risk compensation mechanisms, and offer loans to different types of startups, which are founded by new urban residents, at different stages of entrepreneurship.

The China Banking and Insurance Regulatory Commission Sichuan Office guided banking institutions to increase the maximum amount of guaranteed loans for startups, simplify procedures for processing these types of loans and make full use of related favorable policies. It also encouraged banks to develop loan products dedicated to new urban residents to help them start a business in cities and towns.

As of the end of May, the Sichuan provincial banking sector's outstanding balance of guaranteed loans for startups reached 6.12 billion yuan ($917 million), up 21.6 percent year-on-year.

The CBIRC will join hands with local governments to guide banks and insurers to lower new urban residents' financing costs for starting a business, ramp up support for micro and small businesses which hire a large number of new urban residents and increase the insurance coverage level for this group of people in terms of starting a business and getting a job, said Wang Zhaodi, chief examination officer and spokesperson of the CBIRC, at a news conference on April 15.