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Watchdog considers ratio rules options
By Hu Xiaocen |
17:12 UTC+8 March 5, 2013
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Online Edition
Online Edition
CHINA'S bank watchdog is conducting in-depth analysis of current loan-to-deposit ratio rules and looking at alternative models, its head is reported to have said.
"Any change of the rule should be replaced by other methodology," China's Banking Regulatory Commission chairman Shang Fulin Shang said this morning, according to the China Securities Journal website.
The loan-to-deposit ratio regulates the maximum amount of loans a lender can extend based on the deposit it holds for a period of time.
This is capped at 75 percent on Chinese mainland.
Banks face mounting pressures from eroding margins as the nation looks at a more liberal interest rate regime.
In addition, they compete for the public's spare cash with central government, which encourages domestic consumer spending to drive up the economy.
Banks regularly appeal to China's Banking Regulatory Commission for a loosening in controls.
They argue that if they could lend more for profit this would support China's economic growth.
Commercial lenders on Chinese mainland maintained the ratio at 65.3 percent by the end of last year, 0.5 percentage points up from a year earlier, according to the watchdog.
Shang also said before the first annual session of the 12th National People's Congress that the implementation of the controls has strengthened banks' liquidity management in the past years, which has positive meanings.
"Any change of the rule should be replaced by other methodology," China's Banking Regulatory Commission chairman Shang Fulin Shang said this morning, according to the China Securities Journal website.
The loan-to-deposit ratio regulates the maximum amount of loans a lender can extend based on the deposit it holds for a period of time.
This is capped at 75 percent on Chinese mainland.
Banks face mounting pressures from eroding margins as the nation looks at a more liberal interest rate regime.
In addition, they compete for the public's spare cash with central government, which encourages domestic consumer spending to drive up the economy.
Banks regularly appeal to China's Banking Regulatory Commission for a loosening in controls.
They argue that if they could lend more for profit this would support China's economic growth.
Commercial lenders on Chinese mainland maintained the ratio at 65.3 percent by the end of last year, 0.5 percentage points up from a year earlier, according to the watchdog.
Shang also said before the first annual session of the 12th National People's Congress that the implementation of the controls has strengthened banks' liquidity management in the past years, which has positive meanings.
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