(Yicai) Sept. 27 -- Industrial Banks has become the first Chinese commercial lender to confirm it will issue loans to listed companies and major shareholders to support stock repurchases and shareholding increases.

Industrial Bank will prioritize loans to listed firms with stable market capitalization, active trading in the secondary market, and solid liquidity, as well as those included in indexes such as the CSI300, CSI500, and CSI1000, Yicai learned from the Fujian province-based bank.

For listed companies with restrictions on shareholding reductions or excessively high stock pledge ratios, Industrial Bank will be particularly cautious about issuing such loans, the lender added.

On Sept. 24, the People’s Bank of China unveiled a big support package to bolster China’s economy. The central bank also announced a special re-lending plan to guide lenders in providing loans to listed firms and major shareholders to support stock repurchases and shareholding increases.

The re-lending plan will have a quota of CNY300 billion (USD42.8 billion) in the first phase, with a benchmark interest rate of 1.75 percent, PBOC Governor Pan Gongsheng said at a press conference on the same day. Commercial banks will be allowed to issue such loans at interest rates of up to 2.25 percent, 50 basis points above the benchmark rate, he added.

The quota will be raised in the future if the implementation of the re-lending plan is smooth, Pan noted.

China’s stock market benchmarks soared after the package was set out. The Shanghai Composite Index [SHA: 000001] soared 12.3 percent between Sept. 24 and today, while the Shanghai Stock Exchange Star 50 [SHA: 000688] gained 15.1 percent. The Shenzhen Component Index [SHE: 399001] added 17.7 percent, and the tech-heavy ChiNext Index [SHE: 399006] 23.2 percent.

They had fallen 7.6 percent, 24.5 percent, 15.1 percent, and 19.1 percent, respectively, this year as of Sept. 23.

Editors: Dou Shicong, Futura Costaglione