Shanghai's financial watchdog has released a new policy framework on September 14th, outlining 17 targeted measures across four core areas to strengthen the region's banking and insurance services for technology enterprises. The directive, issued via the Shanghai Financial Regulatory Bureau's official website, is designed to enhance professional capabilities, refine service systems, deepen partnership mechanisms, and elevate risk control standards. This initiative aims to foster a virtuous cycle among technology, industry, and finance.

On the front of professional capability enhancement, the policy encourages banks and insurance firms to establish a dedicated framework comprising tech-finance lead departments, specialized business units, and professional institutions. These entities are to be governed by differentiated management requirements and evaluation standards, with increased resource allocation supported through delegated approval authority, special performance incentives, and expedited approval channels. For internal assessments, institutions are urged to develop evaluation systems tailored to the unique growth patterns of the tech sector. This includes setting reasonable scale and quality metrics for tech-finance services, moderately reducing the weight of profit-related indicators, extending performance evaluation cycles, and implementing dedicated reward and subsidy mechanisms.

The guidelines also advocate for the improvement of due-diligence exemption and error-tolerance mechanisms. Specifically, they propose the creation of clear positive and negative lists outlining situations where exemptions apply, alongside defined accountability standards, while aiming to increase the proportion of liability waivers and mitigations. Banks with suitable conditions are encouraged to moderately raise the acceptable non-performing loan ratio for tech enterprises, mirroring regulatory standards applied to inclusive small and micro credit, and to explore differentiated methods for handling distressed assets. Furthermore, insurance companies are pushed to establish an error-tolerance framework for tech insurance innovation, allowing for a higher tolerance for comprehensive loss ratios and cost ratios on new, unproven products lacking historical data.

In the realm of technology credit, the policy mandates heightened credit backing for research and development as well as the commercialization of scientific achievements. This support is to be differentiated across product limits, loan tenors, pricing mechanisms, and collateral requirements. Specific emphasis is placed on financing breakthroughs in 'neck-jamming' technologies to ensure the autonomy and controllability of critical industry supply chains. The measures also endorse enterprise adoption of financial leasing for technological upgrades and equipment overhauls, and facilitate mergers and acquisitions within the tech sector. While maintaining steady growth in the overall technology loan portfolio, the policy directs banks to optimize loan structures, boosting support for small and medium-sized enterprises and hard-tech ventures. This involves increasing the share of first-time borrowers, unsecured credit, and medium-to-long-term lending. Crucially, the policy mandates that loan renewals for tech firms should be processed comprehensively, with an 'all that can be renewed, should be renewed' approach. For working capital loans with protracted cash recovery cycles, the maximum loan term may be extended to five years to support long-term technological advancement.

Within the insurance sector, the policy calls for the swift development of a product and service system covering the entire spectrum of technological innovation. Insurers are to provide innovative products such as R&D liability insurance, pilot-test insurance, equipment damage coverage, intellectual property insurance, and compensation for losses from technology commercialization failures. These offerings are targeted at critical stages like talent entrepreneurship, technology R&D, result commercialisation, application promotion, and IP protection. The guidelines also promote research into the application of M&A insurance within the tech field, with plans for pilot implementations in leading industries. For smaller tech firms facing common risk profiles, the policy advocates for the launch of standardized, low-premium, basic insurance packages. Additionally, there is a push to enhance insurance provisions for tech innovators and related professionals, improving welfare in areas like healthcare management, eldercare services, and professional liability.

To diversify financing avenues, the policy promotes the expansion of pilot programs for long-term investment by insurance funds. It encourages insurers to increase capital contributions to venture capital, equity, and buyout funds based in Shanghai, and supports local insurance entities in establishing private equity and securities investment funds that focus on strategic emerging industries and hard-tech sectors. Concurrently, the guidelines seek to deepen collaborations between banks and various funds, ensuring the successful rollout of equity investment pilots by financial asset investment companies in the city, thereby broadening equity financing channels for tech enterprises. The policy also advances efforts to create a comprehensive pilot ecosystem for intellectual property finance. This includes broadening the reach of IP financial services, enhancing the adoption of IP pledge financing, and expanding the range of acceptable collateral. New experiments are encouraged, such as securitization of patent development licensing revenues, IP asset-backed securities, comprehensive IP innovation insurance, and IP service trusts designed to provide asset isolation, income distribution, and liquidity for the IP holdings of tech firms and research institutes.

Regarding risk management, the policy mandates that banking institutions establish independent credit evaluation systems for tech enterprises, diminishing reliance on third-party guarantees and external assessments. This approach integrates the enterprise's technological innovation capabilities directly into the evaluation criteria. Concurrently, insurance companies are tasked with reinforcing risk management for tech insurance. The policy encourages the use of co-insurance and reinsurance arrangements to mitigate risks associated with major technological breakthroughs. It also calls for research into specialized risk transfer tools, which would enable social capital to participate in risk diversification efforts.