China's Ministry of Finance and the China Banking Regulatory Commission are studying on the draft of a measure to annul bad loans for small and medium size enterprises and companies specializing in agriculture services.

The measure is said to aim to help SMEs and agricultural enterprises reduce the burden of the economic downturn through loan extension and interest reduction. It is understood that companies that have reached a certain credit class or meet the relevant functional requirements can apply for loan extensions. And if they meet other conditions, part of the interest of their loan can be lowered.

Local media quoted a banking professional as saying that the banks will suffer losses in the process, but they are willing to implement the measures to show their support to the development of these enterprises.

Data released by China's central bank shows that most of the additional CNY1.6 trillion loans in January 2009 was given to middle and long term government projects and large-sized enterprises.

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