China's banking regulator has asked banks to ensure small enterprises have sufficient credit and to show more tolerance for companies that are having trouble making payments amid increasing operational difficulties as economic growth slows, the state-run Economic Information Daily reported on Wednesday.

The newspaper cited an unidentified official with the China Banking Regulatory Commission as saying that banks have been asked to avoid cutting off smaller companies from bank credit as a way of controlling risk.

The regulator also urged banks to attach more importance to the cash flow of small companies when making loans rather than focusing only on collateral, according to the report.

Enterprises have been facing increasing difficulties this year due to rising costs and declining profits amid a sluggish global economy and government curbs on the domestic property market. Smaller companies have been particularly hard-hit, and banks have been increasing their vigilance against nonperforming loans.