China may try new ways to man­age bank credit-sources

The Pak Banker - - Front Page -

BEI­JING: China's cen­tral bank is con­sid­er­ing chang­ing the ways it man­ages bank credit, an im­por­tant com­po­nent of its mon­e­tary pol­icy man­age­ment, three sources close to the mat­ter told on Tues­day. The Peo­ple's Bank of China (PBOC) may drop the over­all loan quota sys­tem and de­cide how much a bank can lend by look­ing at len­ders' cap­i­tal ad­e­quacy ra­tios, liq­uid­ity con­di­tions and pro­vi­sions for bad loans. Un­der the pro­posed new credit con­trol sys­tem, PBOC will be more ag­gres­sive and fre­quent in us­ing tools such as dif­fer­en­ti­ated bank de­posit re­serve ra­tio, des­ig­nated cen­tral bank bills and "win­dow guid­ance", which is a di­rect or­der to bankers to rein in bank credit, the sources said. "The cen­tral bank has held in­ter­nal dis­cus­sions, and have talked about it with bankers. But the plan is not fi­nalised as there are still dis­agree­ments," one source close to mat­ter said. China has de­cided to adopt a pru­dent mon­e­tary pol­icy for 2011, in part due to ris­ing price pres­sures, but Bei­jing has yet to an­nounce its loan tar­get for next year. - PB News

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