China scraps loan-to-de­posit ra­tio cap: Xin­hua

The China Post - - INTERNATIONAL -

China on Satur­day scrapped a two-decade limit on the per­cent­age of funds banks can lend out rel­a­tive to de­posits, state media re­ported.

China’s com­mer­cial bank­ing law has since its en­act­ment in 1975 stip­u­lated that no more than 75 per­cent of a bank’s de­posits could be of­fered as loans, Xin­hua News Agency said.

But the stand­ing com­mit­tee of China’s Na­tional Peo­ple’s Congress (NPC) amended the law to re­move the 75-per­cent loan-to-de­posit cap, Xin­hua re­ported, with the change com­ing into force on Oct. 1.

The NPC is the Chi­nese Com­mu­nist Party-con­trolled leg­is­la­ture.

The amend­ment comes af­ter the Peo­ple’s Bank of China (PBOC), the cen­tral bank, an­nounced Tues­day it was cut­ting bench­mark in­ter­est rates and would also re­duce the amount of funds banks must keep on hand, seen as a bid to boost lend­ing and sup­port China’s fal­ter­ing econ­omy.

The PBOC also an­nounced the elim­i­na­tion of a ceil­ing on in­ter­est rates for time de­posits with a ma­tu­rity of more than one year.

China has been tak­ing steps to lib­er­al­ize con­trols on in­ter­est rates, which ex­perts see as a key part of fur­ther open­ing up the coun­try’s fi­nan­cial sys­tem.

China, the world’s sec­ond-largest econ­omy, has been ex­pe­ri­enc­ing a broad slow­down in gross do­mes­tic prod­uct growth and author­i­ties have come un­der pres­sure to do more to sup­port it.

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