The People's Bank of China (PBOC) and China Banking Regulatory Commission (CBRC) issued a notice Sunday telling their branches and domestic commercial banks to help poor students in need of loans.

Four State departments -- the Ministry of Education, Ministry of Finance, PBOC or the central bank, and CBRC -- developed a morerelaxed policy on student loans last August, hoping to ensure those in financial difficulty finish their higher education.

The loan reform will also "safeguard fair education" in the country and provide business opportunities for commercial banks, the notice said.

The notice required commercial banks issue student loans "in time and at promised amount" while preventing business risks.

Under the policy in 2004, which began last fall, the time limitfor loan repayment by college students would be extended to six years after graduation.

Eligible students, ranging from full-time undergraduates to postgraduates as well as those taking second degrees, will get loans of up to 6,000 yuan (723 US dollars) per school year. No interest will accrue during their campus years.

For students who fail to find a job or get a decent salary immediately after graduation, there will be a grace period of one or two years for the repayment.

Under the 2004 policy, students applying for the loans do not need a guarantor or any collateral. This means that banks face a large risk in granting the loans, because they have no credit history for the borrowers.

China now has more than 2 million college students who experience financial difficulties and need these loans. They account for about 20 per cent of the total on-campus students, according to sources from the Ministry of Education.

While higher education is experiencing rapid development in China, the number of college students from poverty-stricken families has also been increasing, according to analysts. The latest policy had eased students' financial burdens and would stimulate further progress in higher education.

In the meantime, a mechanism of risk prevention and compensation was set up under which the Ministry of Finance established a special fund to compensate commercial banks that bidfor student loan business.

Those failing to repay their loans within the time limit will be put on a bad credit list and exposed to the public through the media.

Source: Xinhua