(Adds more details, comments, forint)
By Gergely Szakacs and Krisztina Than
BUDAPEST, Nov 3 (Reuters) - Hungary's central bank will extend its funding for growth scheme into 2016 with 600 billion forints ($2.10 billion) and launch measures to boost market-based lending to small and medium-sized businesses, it said on Tuesday.
Under its new pro-growth programme, the National Bank of Hungary, led by a close ally of Prime Minister Viktor Orban, wants banks to gradually return to market-based lending as it phases out its massive Funding for Growth programme which it launched in 2013.
Domestic banks who participate in the new programme will have to undertake to boost their loan stock to small and medium businesses (SMEs), with concrete targets.
Analysts expect Hungary's economic growth to slow next year and the National Bank believes commercial banks are still not lending enough to the corporate sector.
"As a result of the above programmes, the stocks of corporate and targeted SME loans are expected to increase by HUF 250-400 billion in 2016, which is equal to an annual growth rate of 5-10 per cent," the bank said in a statement.
The forint eased to a four-week low of 313.7 to the euro on Tuesday after some elements of the plan were published in a newspaper in the morning.
"The aim is to have a lasting turnaround in market-based lending in 2016," Deputy Governor Marton Nagy told a news conference later. He said the programme was expected to boost growth above the 2.5 percent rate forecast by the central bank.
The bank has criticised commercial banks for being too risk-averse and for not lending enough to companies.
It said the new programmes will make "it possible to draw a distinction between those banks that are active participants and those that are passive participants of the credit market."
The central bank has already cemented its base rate at a record low of 1.35 percent to boost the slowing economy.
Under its new programme, it will offer an interest rate swap conditional on lending activity (LIRS) and a preferential deposit facility for domestic banks.
The new interest rate swaps worth up to 1 trillion forints will be available for banks in 2016 over a limited period and at a maximum maturity of three years.
"A condition of access to the facility is that banks increase their stock of (performing) loans to SMEs by one-quarter of the allocated amount annually, i.e. by HUF 250 billion if the facility is fully allocated," the bank said.
The central bank said it may also consider a lower capital requirement for banks that lend to small and medium businesses. ($1 = 286.01 forints) (Reporting by Krisztina Than and Gergely Szakacs)