China to expand IP pledge financing to support innovative enterprises

China's banking and intellectual property regulators have decided to jointly boost the use of intellectual property (IP) as a financing tool to support the development of innovative enterprises, an official statement said on Aug 16.

The statement released by the China Banking and Insurance Regulatory Commission to encourage banks and insurers to grant greater support to the use of intellectual property as a pledge for financing.

Commercial banks are encouraged to establish separate credit programs and specific in-house performance appraisal and incentive mechanisms to support IP pledge financing under the premise of having risks under control, said the statement.

A feasibility study can be advanced in the sphere of using IP assets, geographical indications, layout designs of integrated circuits as collaterals for financing, it said.

The commission also said it would tolerate a slightly higher bad loan ratio in IP pledge financing business of commercial banks.

For commercial banks, however, major hindrances in the way relate to the evaluation, disposal and sell-off of IP pledges.

Solutions given by the commission involve the training of IP pledge financing specialists, the establishment of a sound in-house evaluation mechanism, making pledge registration, strengthening the dynamic management of collaterals and tightly monitoring borrowers' business operations.

The balance of IP pledge financing of China's banking institution stood at 98.5 billion yuan at the end of March, up 98 percent from the end of 2018, official statistics showed.