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China adjusts reserve requirement ratios for smaller banks
By Zhang Fengming |
February 11, 2011, Friday
|
Online Edition
Online Edition
CHINA has reportedly imposed differentiated reserve requirement ratios on some smaller banks after a January credit surge.
The adjustment that mainly impact city commercial banks was made after the Spring Festival holiday, reported China Securities Journal, citing sources it didn't name.
Credit expansion in January remained strong with new loan increment expected to be around 1.25 trillion yuan (US$190 billion).
The People's Bank of China said in late January that it would closely monitor bank lending this year and assign different reserve requirement ratios for commercial lenders based on their capital strength.
The move is among a package of measures to control inflation and ward off assets bubbles this year.
On Wednesday, the central bank raised its benchmark interest rates for the third time since October. The one-year benchmark deposit rate rose to 3 percent from 2.75 percent while the one-year benchmark lending rate increased by the same 25 basis points to 6.06 percent.
Besides, China raised the industry-wide reserve requirement ratio six times in 2010 and once earlier this month.
China shifted its monetary policy from relatively easing to prudent this year.
Economists agreed that more tightening measures would be rolled out in the first half of this year to kill inflation worries.
China's Consumer Price Index, the main gauge of inflation, rose 4.6 percent in December, easing from a 28-month high of 5.1 percent in November. However, economists are widely expecting a faster inflation for January, which is due next Tuesday.
China's new yuan lending exceeded the target in 2010, adding pressure for authorities to tighten policy.
Banks in China extended 7.95 trillion yuan of yuan-denominated loans last year, beyond the official target of 7.5 trillion yuan.
The adjustment that mainly impact city commercial banks was made after the Spring Festival holiday, reported China Securities Journal, citing sources it didn't name.
Credit expansion in January remained strong with new loan increment expected to be around 1.25 trillion yuan (US$190 billion).
The People's Bank of China said in late January that it would closely monitor bank lending this year and assign different reserve requirement ratios for commercial lenders based on their capital strength.
The move is among a package of measures to control inflation and ward off assets bubbles this year.
On Wednesday, the central bank raised its benchmark interest rates for the third time since October. The one-year benchmark deposit rate rose to 3 percent from 2.75 percent while the one-year benchmark lending rate increased by the same 25 basis points to 6.06 percent.
Besides, China raised the industry-wide reserve requirement ratio six times in 2010 and once earlier this month.
China shifted its monetary policy from relatively easing to prudent this year.
Economists agreed that more tightening measures would be rolled out in the first half of this year to kill inflation worries.
China's Consumer Price Index, the main gauge of inflation, rose 4.6 percent in December, easing from a 28-month high of 5.1 percent in November. However, economists are widely expecting a faster inflation for January, which is due next Tuesday.
China's new yuan lending exceeded the target in 2010, adding pressure for authorities to tighten policy.
Banks in China extended 7.95 trillion yuan of yuan-denominated loans last year, beyond the official target of 7.5 trillion yuan.
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