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China Urging Small Banks to Cut Deposit Rate by 10bps

China’s interest rate regulator is encouraging smaller banks to lower the ceiling on deposit rates by 10 basis points, to 65bps above the benchmark rate, not 75bps

New bank loans plunged in China in July.
Household loans, including mortgages, fell to 121.7 billion yuan in July from 848.2 billion in June, while corporate loans slid to 288 billion yuan from 2.2 trillion, the latest data revealed on Friday shows. File photo: Reuters.


China’s interest rate regulatory body is encouraging smaller banks to lower the ceiling on deposit rates by 10 basis points, two sources with direct knowledge of the matter said on Friday.

Under the guidance shift, smaller lenders would set a ceiling on time deposits of 65 basis points above the benchmark rate, compared with 75 bps until now, according to the sources.

Both sources said the move, first reported by domestic financial media outlet Caixin, was not mandatory.

But lenders who comply would receive bonus points in the macro prudential assessment, which is a central bank-led quarterly health check.

China reformed the way banks calculate deposit rates last year, in a bid to help ease pressure on banks’ funding costs.


• Reuters with additional editing by Jim Pollard



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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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