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24 April 2024

China regulator eases guidelines to spur bank loans

By Reuters

China's banking regulator has urged banks to ramp up lending to help finance the government's four trillion yuan (Dh2.1 trillion) economic stimulus package.

In a 10-point plan posted on its website, the China Banking Regulatory Commission also encouraged banks to lend more to farmers, to small businesses and to sound companies facing temporary financial or operational difficulties due to the global downturn.

To that end, the CBRC said in the case of small and medium-size lenders it would relax a regulation barring banks from lending out more than 75 per cent of their deposits. It also encouraged banks to broaden the scope of their lending, for example by doing more financing of mergers and acquisitions.

The regulator said it was not relaxing its supervision of banks' risk management but rather adjusting its policies to support Beijing's efforts to sustain economic growth. The central government has said it will pay for only 30 per cent of the two-year stimulus programme, and wants banks to finance a big chunk of the remainder.