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China starts publishing loan rates based on quotes from banks
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CHINA today started publishing loan rates based on quotes from banks as a step towards establishing a market-based interest rate system.
Nine banks, including China's five largest state-owned commercial banks and four joint-stock banks, submit the lending rate they charge their best clients on a daily basis, and China's inter-bank funding center will calculate and publish a weighted average rate based on the submissions, the People's Bank of China said in a statement today.
The one-year rate is 5.71 percent today, compared with the PBOC-set benchmark of 6 percent.
"This is seen as a step towards further interest rate liberalization. We think this is a reasonable level as commercial banks normally offer a 10 percent discount of the policy lending rate to the best customers," the Australia and New Zealand Banking Group said in a note.
The rate, known as Loan Prime Rate, can be used as a reference for banks to set lending rates and will gradually replace the current benchmark set by the central bank, the statement said.
China on July 20 scrapped a lower limit on lending rates as an effort to form market-oriented interest rates. Banks were previously allowed to lend at no lower than 30 percent below the benchmark rates set by the central bank.
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