The China Banking Regulatory Commission (CBRC) has allowed three banks to issue special bonds worth 110 billion yuan to finance loans to the micro- and small-enterprises (MSE).

China Minsheng Bank, Industrial Bank and Shanghai Pudong Development Bank were allowed to issue bonds of up to 50 billion (7.73 billion U.S. dollars), 30 billion and 30 billion yuan respectively to channel loans to companies borrowing below 5 million yuan.

The loans under the policy will be excluded from the banks' loan-to-deposit ratio calculation.

To help ease the capital crunch for small firms, the CBRC revealed a detailed plan last month to encourage financial support for small- and micro-sized firms.

As of the end of September, outstanding loans made to small- and micro-sized companies totaled 14.75 trillion yuan, accounting for 27.9 percent of all outstanding loans.

Loans made to micro-sized businesses and individual businesses reached 4.65 trillion yuan by September, accounting for 8.8 percent of all loans.

China's small companies have always been at a disadvantage in raising funds, especially after the country strived to reduce new lending and mop up liquidity this year in an effort to curb asset bubbles and inflation.