BEIJING -- The People's Bank of China (PBOC) said Monday that it has arranged a 12 billion yuan ($1.94 billion) re-lending quota to boost financial support for small and micro-businesses and rural areas.

Re-lending is a monetary tool used by the PBOC, the country's central bank, to increase financial institutions' liquidity and guide credit flows.

The central bank requires that funds from the quota be credited to small and micro-businesses, as well as the agricultural sector, rural areas and farmers.

About 162 billion yuan has accumulated in the re-lending quota to date, and 45 percent has gone to small and micro-businesses and 27 percent to rural areas.

The re-lending tool has played a constructive role in increasing the availability of credit for small and micro-businesses and rural areas, according to a statement from the bank.

China has been pursuing a prudent monetary policy while trying to utilize its credit reserves to support the real economy.