China’s banking regulator told domestic lenders to better manage their deposit-loan ratios, a measure of a bank’s ability to absorb risk, and classify bad loans, Caixin reported Friday.
This follows a pledge by the China Banking Regulatory Commission (CBRC) to ease the deposit-loan ratio by including some stable sources of deposits in the calculation in order to boost the banks’ lending capacity, the report said, citing vice chairman Wang Zhaoxing.
China caps lending at no more than 75 percent of bank deposits. “Banks are currently lending about 65 percent of their deposits and are still far away from the 75 percent ceiling,” Wang said.
The CBRC will further increase credit supply to help small businesses, make loan approvals more efficient and lower borrowing costs, Wang said.
Policymakers will use open-market operations, required reserve ratio and other means to adjust liquidity and keep the money market stable.
Although risk in property loans is manageable, the CBRC is closely monitoring the property market in third and fourth-tier cities to avoid a potential credit crunch, Wang was quoted as saying.
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