MYbank announces interest-free grant to aid SMEs
Alibaba-backed digital lender MYbank said it aims to partner with other financial institutions to provide interest-free subsidy for small loans totalling 300 billion yuan (US$42.3 billion) over five years to boost economic recovery.
The introductory offers from itself as well as other lenders grants zero interest rates to borrowers for a short period of time and alleviate cash flow pressure for those with little financing options.
The default rate of small loans has risen to a little over 2 percent since May, compared with around 1.5 percent before the pandemic, Chairman of MYbank and President of Ant Group Hu Xiaoming told the MYbank Microfinance Partner Conference on Tuesday.
In previous months it has worked with local lenders to extend small and micro loans to business owners and online merchants with a one-month interest-free period, and the total lending amount is expected to reach 30 billion yuan this year.
"We need to beef up technology capabilities to track lenders' credibility, which has shown strong resilience amid the pandemic outbreak," Hu added.
The interest-free periods will vary according to each borrower's situation, he added.
Since the digital lender's establishment five years ago, it has served some 29 million small and micro businesses, including even street stall owners.
Their average loan amount was 36,000 yuan, and 80 percent of borrowers had never received a bank loan before.
It also plans to better leverage technology and data analytics especially in rural areas to make financial services more accessible to farmers and agri products growers, covering 2,000 rural counties or regions in the country.
A joint initiative proposed by MYbank and the All-China Federation of Industry and Commerce in March was joined by more than 100 commercial banks, including major lenders as well as industry associations, and has covered 10 million micro businesses as of June.
The online lender, in which Ant Group holds a 30-percent stake, has grown its customer base by more than tenfold since the end of 2016.
Ant's financial services has built up a credit-rating system based on online and offline transactions and buyers' feedback to offer collateral-free financing.