China’s central bank will adjust rules for calculating bank deposits starting next year to boost lending.
Several joint-stock commercial banks said they have received a central bank circular regarding the new policy, according to state news agency Xinhua.
Some interbank deposits, including savings for securities and transaction settlement, as well as savings held by banks for non-deposit-taking financial institutions, will be calculated as regular bank deposits under the new regulations, the report said.
Also, the reserve requirement ratio for newly increased deposits under the new rules will be temporarily set at zero.
Analysts said the move is expected to lower banks’ loan-to-deposit ratio and increase their available funds for lending amid tight liquidity.
Guo Tianyong, a professor in the Central University of Finance and Economics, said that the new rules increase the weighting of deposit in calculating the loan-to-deposit ratio, resulting in a lower ratio.
That means means banks have more money to lend, reflecting more flexibility in monetary policy, Guo said.
Haitong Securities said the adjustment could unleash 5.5 trillion yuan (US$899 billion) of credit available for lending.
“We expect the average loan-to-deposit ratio of commercial banks to fall 5 percent,” it said.
Lian Ping, chief economist of the Bank of Communications, said the change will mainly benefit small and medium-sized banks because large banks are not under heavy pressure from the loan-to-deposit ratio.
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