China’s central bank will cut the reserve requirement ratio (RRR) for lenders whose new loans to the farm sector last year have exceed 50 percent of their total lending this year.
Those banks will receive a reduction of 50 basis points in their RRR, the People’s Bank of China (PBoC) said on its website.
Lenders that have achieved similar levels of micro loans will also qualify for lower RRR.
Also, financial services companies, financial leasing and automobile leasing companies will enjoy a similar cut in RRR to stimulate consumer spending.
The move will benefit about two-thirds of commercial banks, 80 percent of agricultural commercial banks and 90 percent of agricultural cooperatives.
However, there are no changes to the central bank’s monetary policy. Market liquidity is sufficient, the PBoC said.
The new policy will release about 50 billion yuan (US$8 billion) to 100 billion yuan worth of new funds into the market and end speculation over an interest rate cut or an across-the-board RRR reduction, analysts said.
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