Study on loan volatility but loan ratio stays
By Hu Xiaocen |
May 17, 2012, Thursday
|
Print Edition
Print Edition
THE China Banking Regulatory Commission will study the reasons why new lending is volatile, but does not plan to make changes to the loan-to-deposit ratio, a senior official of the CBRC said yesterday.
"We have noticed that bank lending is sometimes volatile at the end of a quarter and the start of a quarter," Wang Zhaoxing, CBRC's vice chairman, said in Beijing. "We are now examining the regulatory system to make banks extend loans at a more steady pace."
Economists have long argued that China should raise the loan-to-deposit ratio to allow banks to lend more to bolster the economy and also to ease them competing for deposits at the end of each quarter to meet regulatory requirements.
The CBRC stipulates the loan ratio at 75 percent. So for 100 yuan (US$15.81) of deposits received by the banks, they can lend out a maximum of 75 yuan. The CBRC also assigns loan quotas for each lender to manage the credit supply.
The growth in loans missed analysts' estimates last month, arousing concerns the regulated bank loan ratio is hurting the supply. Lenders extended 681.8 billion yuan worth of new loans in April, down from 1.01 trillion yuan in March.
But Li Ruoyu, an analyst at the State Information Center, said earlier in a commentary published by the China Economic Herald that the loan ratio is not the direct reason of slowing credit growth.
"Only the commercial banks are regulated by the 75 percent ratio," Li said. "The other lenders, for example, the policy banks, rural and urban credit cooperatives, finance companies, are not subject to the rule. These financial institutions constitute an important force of credit supply in China."
The 21st Century Business Herald said the big-four banks haven't reached the lending limit yet. Lending by ICBC and CCB has risen to 63 percent and 70 percent this year while AgBank's ratio is 57 percent and BOC is 72 percent.
"We have noticed that bank lending is sometimes volatile at the end of a quarter and the start of a quarter," Wang Zhaoxing, CBRC's vice chairman, said in Beijing. "We are now examining the regulatory system to make banks extend loans at a more steady pace."
Economists have long argued that China should raise the loan-to-deposit ratio to allow banks to lend more to bolster the economy and also to ease them competing for deposits at the end of each quarter to meet regulatory requirements.
The CBRC stipulates the loan ratio at 75 percent. So for 100 yuan (US$15.81) of deposits received by the banks, they can lend out a maximum of 75 yuan. The CBRC also assigns loan quotas for each lender to manage the credit supply.
The growth in loans missed analysts' estimates last month, arousing concerns the regulated bank loan ratio is hurting the supply. Lenders extended 681.8 billion yuan worth of new loans in April, down from 1.01 trillion yuan in March.
But Li Ruoyu, an analyst at the State Information Center, said earlier in a commentary published by the China Economic Herald that the loan ratio is not the direct reason of slowing credit growth.
"Only the commercial banks are regulated by the 75 percent ratio," Li said. "The other lenders, for example, the policy banks, rural and urban credit cooperatives, finance companies, are not subject to the rule. These financial institutions constitute an important force of credit supply in China."
The 21st Century Business Herald said the big-four banks haven't reached the lending limit yet. Lending by ICBC and CCB has risen to 63 percent and 70 percent this year while AgBank's ratio is 57 percent and BOC is 72 percent.
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