A preferential mortgage policy, fewer fees, no reserve increase, listing support and more credit - the earthquake-hit areas of Sichuan Province will get a firm helping hand from financial institutions in their reconstruction work, authorities said yesterday.

"We encourage credit to the earthquake-hit areas and capital support to the region," the People's Bank of China said yesterday on its Website, quoting a joint statement involving the China Banking Regulatory Commission, the China Securities Regulatory Commission and China Insurance Regulatory Commission.

The support will be effective until June 30, 2011. The 51 counties or districts identified by the Ministry of Civil Affairs as hard hit by the 8.0-magnitude earthquake on May 12 will enjoy the preferential policies.

Home buyers can enjoy up to a 40-percent discount on mortgage interest rates to purchase their first and second homes, the statement said. The rate on public housing funds will be cut by 1 percentage point.

The measures represent a big leap for the quake-hit areas in getting favorable measures to help in their reconstruction efforts compared with the current policy in other parts of the country.

In cities like Shanghai, the interest discount ranges up to 15 percent for first-home buyers while second-home buyers have to pay a 10-percent premium.

For quake victims, the threshold for the down payment has been lowered to 10 percent of the total purchase price. The down payment was previously set at 40 percent for second-home buyers and 30 percent for first-home buyers.

Companies and individuals in the hard-hit areas that can't pay back loans, which were granted before May 12, on time can have a six-month grace period, the statement said. Banks won't charge a penalty interest on the late payment until the end of this year, and the late payment will not be recorded in the nationwide credit database.

The quake-hit areas will also be exempted from future reserve requirement increases that will apply to other parts of the nation, the statement said.

The central bank has raised the reserve requirement ratio to a 23-year high of 17.5 percent but banks in the hard-hit areas enjoy a 16-percent ratio so that they have more cash to support relief work.

(Shanghai Daily August 14, 2008)