(Bloomberg) -- China’s mega banks are urging branch managers to lend to state-owned companies that buy unsold homes, offering a quick show of support for the government’s housing rescue package unveiled last week.

Industrial & Commercial Bank of China Ltd. and other state lenders are guiding managers to lend against the purchased properties as collateral, according to people familiar with the matter. ICBC didn’t respond to a request for a comment.

The directives — aimed largely as a way to clear excess housing inventory — underscore the urgency in addressing the nation’s property crisis. The push is fraught with challenges for banks, given uncertainties around property valuations and state firms’ ability to generate returns.

The People’s Bank of China last week said it would establish a nationwide program to unleash 300 billion yuan ($41.5 billion) in cheap funding to help state-owned companies buy unsold homes. The support package also includes lower down-payment requirements for homebuyers.

The central bank cash will translate into an estimated 500 billion yuan of credit overall with funding to be extended to 21 banks at a rate of 1.75%. The loans, designed to have a one-year term, will be allowed to roll over four times.

The thrust will center around making merger and acquisition loans, with rates set on a case by case basis, the people said, asking not to be named discussing private information. Banks currently charge about 4% annualized rates for state developers and twice as much for private firms, they added.

It’s unclear whether the guidance will lead to a big jump in lending, given that staff are also being reminded to conduct due diligence and ensure loans are used as intended, the people said. M&A loans are provided to allow state companies to acquire distressed projects from developers with debt issues. 

Policymakers last week unveiled their most forceful attempt yet to lift up the country’s plummeting real estate sector, and encouraged local governments to buy unsold homes from developers for conversion into affordable housing. Last month, China’s 24-man Politburo called for policies to address the nation’s stock of unsold homes.

China’s real estate crisis has become the biggest drag on economic growth, as the indebted developers have failed to deliver pre-sold homes. Official data Friday showed that home prices in April recorded the steepest month-on-month declines in a decade. 

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