Date
26 September 2017
The central bank is making sure a targeted reserve requirement reduction does not stoke speculative activity.  Photo: Reuters
The central bank is making sure a targeted reserve requirement reduction does not stoke speculative activity. Photo: Reuters

Lenders to be assessed yearly for targeted RRR cut eligibility

China’s central bank will conduct an annual review of commercial banks to see if they qualify for a targeted cut in the reserve requirement, China Securities Journal reported Wednesday, citing official sources.

On June 9, the People’s Bank of China (PBoC) announced a 50 basis point cut in the reserve requirement ratio (RRR) for banks that lend to small enterprises and the agricultural sector. The policy took effect on June 16.

Qualified banks were assessed on their 2013 lending. The next review will take place in 2015 and will be based on this year’s figures.

However, the PBoC has no plans to consider banks for targeted RRR cut after June 16, contrary to earlier reports, a central bank source was quoted as saying.

The PBoC will stick to a prudent monetary policy and will ensure the new policy will not stoke speculative activity, the report said.

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