Enhance Loan Fund Disbursement: "As Early As Possible"

On the morning of October 17th, Xiao Yuanqi, Deputy Director of the Financial Regulatory Administration, introduced at a press conference held by the State Council Information Office that since the beginning of this year, the Financial Regulatory Administration has worked with the housing and urban-rural development departments to guide the establishment of a city real estate financing coordination mechanism. This mechanism includes all compliant real estate projects in a "white list," promoting financial institutions to enhance their support for financing of "white list" real estate projects.

On September 26th, the Central Political Bureau meeting called for an increase in loan disbursement for "white list" projects. The Financial Regulatory Administration is currently implementing the spirit of the Central Political Bureau meeting and focusing on its execution. There are several main aspects to this:

Firstly, all commercial housing project loans should be included in the "white list," ensuring "all eligible, all included." The "white list" and the city financing coordination mechanism have been established for over half a year, and thanks to the efforts of all parties, there are now good experiences and practices. A series of relatively complete institutional systems have been explored in terms of government coordination and promotion, financial financing support, and judicial execution guarantees. After being included in the "white list," the management of real estate projects becomes more standardized, and financing becomes more convenient and rapid, playing a very important role in the completion and delivery of projects and in protecting the legitimate rights and interests of homebuyers. I would like to share an example: there is a residential project in Zhuhai, Guangdong, where some houses were sold in the early stage, but later, for various reasons, the project was suspended. After the establishment of the city financing coordination mechanism, several levels including provincial and municipal levels have established corresponding financing coordination mechanisms. Under the coordination and promotion of the coordination mechanism, the project met the conditions and standards for inclusion in the "white list." Eventually, a state-owned large bank provided an additional loan of 600 million yuan for the project, which quickly resumed construction and was completed, with corresponding supporting facilities also built synchronously. The project soon became a best-selling real estate project in Zhuhai. Many people, seeing the completed project and its excellent supporting facilities, came to buy houses in this project.

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Currently, after careful study, the conditions for including all commercial housing real estate development loan projects in the "white list" are in place. In the future, real estate projects that meet the "white list" standards should be managed according to the "white list," ensuring "all eligible, all included." The specific process will involve two forms: review and filing. In terms of review, the current city financing coordination mechanism's process for "white list" projects will continue to play a role and be retained. At the same time, real estate project companies can also discuss with banks, and banks can finance real estate projects according to credit standards, file through the "white list" mechanism, and include them in "white list" management. As I mentioned earlier, after being included in the "white list," project management becomes more standardized, and financing becomes faster and more convenient, which is beneficial for the completion of houses and the protection of the legitimate rights and interests of all parties.

The second point is that for projects entering the "white list," commercial banks should ensure "all eligible, all lent." The Financial Regulatory Administration has guided banks to further intensify their efforts on the basis of the existing working group mechanism, implement loan disbursement progress for each project, moderately delegate approval authority, improve approval and disbursement efficiency, and timely disburse loans according to the construction progress of the project. The city coordination mechanisms should also actively coordinate with relevant parties to increase the repair efforts of problematic projects, implement loan disbursement conditions, and cooperate with financial institutions to review and disburse loans. In principle, if the relevant conditions and requirements have not changed, banks should ensure "all eligible, all lent" for projects entering the "white list."

The third point is to optimize the disbursement method of loan funds to ensure "as early as possible." Currently, commercial banks disburse loan funds to real estate project companies in batches according to the construction progress of the project and directly entrust payment to upstream and downstream enterprises such as material suppliers and construction parties. In the future, commercial banks can, under the premise of coordinating with real estate project companies, advance the entire loan to the project fund supervision account opened by the real estate project company based on the fund use plan provided by the real estate project company. Subsequently, based on the actual fund use application, the funds will be entrusted to pay to the fund recipients from the supervision account, advancing the time of fund disbursement. As long as the credit approval is passed, the entire loan can be disbursed to the fund supervision account of the real estate project company. The advantage of this is that loan funds can be quickly and early disbursed to the accounts of real estate "white list" project companies, allowing for early payment to upstream and downstream enterprises, such as cement and steel upstream enterprises, as well as construction enterprises. This ensures that real estate projects and housing projects can start construction as early as possible or even ahead of schedule. At the same time, because these loan funds enter the project fund supervision account of the real estate project company for special use and closed management, they will not be misappropriated by the project company. The loan funds are used to build this project and its supporting facilities and will be fully used for the completion and delivery of the project, which is conducive to protecting the legitimate rights and interests of homebuyers.

As of October 16th, according to statistics, loans approved for "white list" real estate projects have reached 2.23 trillion yuan. It is expected that by the end of 2024, the amount of loan approval for "white list" projects will double, exceeding 4 trillion yuan. To better finance real estate projects and ensure the completion and delivery of houses, the real estate "white list" project financing mechanism will be further optimized and improved to ensure that qualified projects are "all eligible, all included," reviewed loans are "all eligible, all lent," and fund disbursement is "as early as possible."