Local Financing Platform Companies Apply For Loans To Be Implemented.

The Chinese government announced the 13 announcement of the State Council on strengthening the management of local government financing platform companies.

The notice requires that local governments at all levels should conduct a comprehensive clean-up of the debt of financing platform companies in order to effectively prevent financial and financial risks, further strengthen the financing management of financing platform companies and credit management of banking financial institutions, and resolutely curb local governments' violation of security guarantee commitments.

The notice requires that local governments at all levels should promptly clean up, verify and properly handle the debts of financing platform companies, conduct a comprehensive clean-up of debts of financing platform companies, and properly handle debt repayment and subsequent financing of construction projects according to the principles of classified management and differentiated treatment.

The debts included in the liquidation scope include debts directly borrowed by the financing platform company, delinquent or supported by credit support such as guarantee and repurchase.

The notice put forward the specific principles for clearing up the financing platform companies, and made sure that the local governments really need to set up financing platform companies in the future. They must strictly comply with relevant laws and regulations, inject capital into the capital in full, and public assets such as schools, hospitals and parks should not be injected into capital platform companies as capital.

The notice requires that all localities should strengthen the financing management of financing platform companies and credit management of banking financial institutions.

After the liquidation and consolidation, the financing platform of the company must be standardized. The application for loans to the banking financial institutions must be carried out to the project, with the Incorporated Company as the main body of the loan, and in line with the relevant loan conditions.

Financing projects must meet the requirements of national macro-control policies, development plans, industry plans, industrial policies, industry access standards and general land use plans, etc., and perform the project approval, approval or filing procedures according to the relevant provisions of the state.

Banking financial institutions should strictly regulate credit management, and effectively strengthen risk identification and risk management.

We should implement the conditions for the borrowers to enter into the business, perform the examination and approval procedures according to the principle of commercialization, and carefully assess the borrowers' financial capability and repayment sources.

Where there is no stable cash flow as the source of repayment, no loan shall be granted.

The notice also pointed out that we must resolutely curb local governments' violation of guarantee undertaking.

The local government has limited responsibility to the financing platform company in the scope of capital contribution, so as to realize the internalization of debt risk of the financing platform company.

In addition, all regions and departments should study the establishment of local government debt scale management and risk early warning mechanism, and incorporate local government debt revenue and expenditure into budgetary management, and gradually form a local government debt financing mechanism compatible with the socialist market economic system, standardized management and efficient operation.