China's banking and insurance regulator in Zhejiang province want to expand the reach of microfinance to smaller companies that have never received bank loans before by promoting government's sharing of data on small businesses with banks and insurers.

"Based on our past experience, the main problem of microfinance is information asymmetry. Although some micro and small business owners have beautiful dreams and qualities of a good entrepreneur, it still takes time for banks to know them, not to mention that there are many cases of entrepreneurial failure," said Bao Zuming, head of the China Banking and Insurance Regulatory Commision's Zhejiang office.

The biggest challenge facing many micro- and small-sized startups is to search for funding while banks are most cautious about issuing loans to this type of companies. "From the banks' perspective, the key to satisfying startups' financing needs is to solve the problem of information asymmetry. That's why we endeavor to build a platform of comprehensive financial services, which allows banks and businesses to communicate based on the same set of financial statements," Bao said at a news conference on Thursday.

The banking and insurance regulator in Zhejiang launched an online provincial-level platform of comprehensive financial services on Nov 13. The platform gathered a large amount of data from 54 provincial government departments, which accounted for 70 percent of the information on a business that loan officers need to know when they conduct investigations before making a lending decision.

By the end of April, the platform had covered more than 8,000 outlets of 193 banking institutions across the province. During the process of loan issuance, these banks had made more than 5 million data queries on nearly 300,000 companies. Over 140 billion yuan ($19.8 billion) of credit granting was completed directly based on the platform. The credit line of 70 percent of the loans is less than 3 million yuan per loan.

Since the beginning of this year, banks in Zhejiang province have seen a rapid growth of small business borrowers that have never received bank loans before. The number of this type of new clients reached 12,500 in the first quarter, Bao said.