Breaking News
0

China tells banks to 'significantly cut' lending rates for small businesses: sources

EconomyJul 09, 2018 04:34AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A 100 Yuan note is seen in this illustration picture in Beijing

BEIJING (Reuters) - China's financial regulator has told banks to "significantly cut" lending rates for small firms in the third quarter in comparison with the first quarter, two people with direct knowledge of the matter told Reuters on Monday.

In a non-public notice issued by the China Banking and Insurance Regulatory Commission (CBIRC) in late June, the regulator also asked banks to increase real-time monitoring of lending rates, the people said.

The CBIRC didn't immediately respond to an emailed request seeking comment.

The move comes as Beijing's deleveraging campaign has gradually pushed up borrowing costs for the corporate sector and restricted companies from tapping alternative, murkier funding sources such as shadow banking.

China's central bank does not disclose lending rates for small businesses. The weighted average lending rate for the non-financial corporate sector was 5.96 percent in March, according to the latest monetary policy report.

Private companies and small businesses, whose financing costs tend to be much higher than those for large state firms, have suffered the most in the strained liquidity conditions.

Recent official surveys also show that tight funding has hit smaller manufacturers.

To ease refinancing pressure on small businesses - the backbone of the world's second largest economy - China's central bank recently cut banks' reserve requirement ratios (RRRs) by 50 basis points (bps), releasing $108 billion in liquidity.

During high-level government meetings, Premier Li Keqiang has repeatedly urged that banks effectively lower financing costs, especially for small businesses and the agricultural sector.

In the June notice, Chinese banks were also told to keep asset quality and overall costs of their small business lending at a reasonable level, said the sources who declined to be named as they were not authorized to speak to the media.

The CBIRC has asked its branches nationwide to strengthen regulatory review to examine the progress made by banks, the sources said.

China tells banks to 'significantly cut' lending rates for small businesses: sources
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email