China's central bank governor Zhou Xiaochuan Thursday urged commercial banks to extend loans to small and medium-sized enterprises and strengthen research on fund-raising for those enterprises.

Zhou, governor of the People's Bank of China, made the remarks at the China Bond Market Development Summit which opened here on Thursday.

He said China's four big state-owned banks, including the Industrial and Commercial Bank of China, the China Construction Bank, the Bank of China and the Agricultural Bank of China, and some share-holding banks are attaching importance to extending loans to large state-owned enterprises with good economic performance in a bid to reduce banks' non-performing assets and improve the quality of the enterprises' assets.

"It is not wrong to do so," the governor said, adding, however, that the loans extended to these enterprises would be affected once these enterprises start to raise funds via the share and bond markets.

He pointed out that international experience showed that when big enterprises begin raising funds through the bond market, banks feel a need and pressure to provide more fund-raising services to small and medium-sized enterprises.

He warned, nevertheless, that there are risks in issuing loans to small and medium-sized enterprises because of the high benefits and high risks of their bonds. He called for more research on this project.

(Xinhua News Agency October 21, 2005)