(Yicai) Aug. 14 -- The People's Bank of China has decided to add CNY100 billion (USD14 billion) of refinancing to support agricultural and small businesses in 12 provincial-level regions that have ravaged by floods.

The move is aimed at bolstering flood prevention, disaster relief, and post-disaster reconstruction in the severely hit areas, as well as boost credit support for businesses there, especially micro and small firms, sole proprietors, agricultural companies and individual farmers, the central bank said yesterday.

The regions that will receive the additional refinancing -- PBOC loans to financial institutions -- are the provinces of Fujian, Guangdong, Henan, Heilongjiang, Hunan, Jilin, Jiangxi, Liaoning, Shaanxi, and Sichuan, as well as the municipality of Chongqing and Guangxi Zhuang Autonomous Region.

The increase of financial support for specific areas in this way is relatively rare, reflecting the precision of structural monetary policy tools, Dong Ximiao, chief researcher at Merchants Union Consumer Finance, told Yicai. 

This way the PBOC can provide low-cost funding to financial institutions in disaster-hit areas, helping to boost their lending and lower financing costs, Dong added.

To guide financial institutions in supporting agricultural businesses and SMEs, the PBOC has set up a refinancing tool for each, with their one-year interest rates set at 1.75 percent, compared with the 2.3 percent medium-term lending facility rate for the same term.

The PBOC will urge its branches in the 12 regions to make good use of the newly added refinancing, accurately match the financing needs of disaster relief and post-disaster reconstruction, and also simplify procedures, speed up approvals, and help affected businesses resume production, it said.

Editors: Dou Shicong, Martin Kadiev