Industrial and Commercial Bank of China Ltd (ICBC), the world's largest bank by market value, is looking to increase its loan balance to smaller businesses by three percentage points within three years, an official from the bank said.

Last year, ICBC loans to small and micro enterprises amounted to 800 billion yuan, approximately 10 percent of the bank's total, said Nie Dazhi, deputy head of ICBC's credit department.

That excluded some government financing vehicles that were registered with a small capital but were actually running large-scale businesses, Nie said.

According to Nie, there were 800 billion yuan in new loans in 2011, of which about 25 percent, or 230 billion yuan, went to smaller businesses.

"The incremental loans this year will be generally the same amount as last year, but credit support to smaller businesses will continue to grow," Nie said.

In this way, he said, loans to smaller business will be raised to above 13 percent of ICBC's total loan balance, from the current 10 percent. That means at least 240 billion yuan more loans in the next two to three years.

"The key to a successful economic transition in China lies in the survival of smaller businesses, which account for 99 percent of the total number," said Li Luyang, deputy secretary-general of China Association of Small and Medium Enterprises.

However, smaller businesses are losing their edge because the advantage of lower cost fades away and credit is not readily available, Li said.

Small- and medium-sized enterprises (SMEs) contribute more than 60 percent of China's economic output, 50 percent of the tax revenues, and 80 percent of jobs, he added.

However, 90 percent of SMEs fail to get credit from commercial banks due to lack of proof of credit; about 60 percent seek private financing.

Despite good intentions, analysts say establishing credit support for SMEs will be a gradual process.

"Chinese commercial banks are more like pawnshops," said Jin Bei, head of the institute of industrial economics with the Chinese Academy of Social Sciences, explaining that all loans need collateral due to lack of a credit system.

But Jin said the banking system is not solely to blame, because safety and a guaranteed profit are their first priority.