Government policies encouraging financial institutions to support enterprises hit by the novel coronavirus outbreak are only interim measures and do not indicate relaxing of financial regulation, an official with China's top banking regulator said Tuesday.
Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, said the policies aimed at helping enterprises survive the epidemic are temporary and conditional.
For instance, policies encouraging lenders to roll over loans only target companies having trouble repaying their debts as a result of the outbreak, and the payment should be originally due before the end of June, Xiao said.
If companies are still unable to pay when they resume normal operation, the unpaid debts will still be classified as bad loans, he said.
Xiao said he expects non-performing loans to slightly go up in the short term, but there would not be much impact as most companies are only facing temporary setbacks caused by the external environment.
"Non-performing loans in the banking sector are overall under control," he said, citing figures that China has nearly 6 trillion yuan (852.7 billion U.S. dollars) of provisions to cover bad loans while the capital adequacy ratio stands at 14.64 percent.
Latest comments