China's central bank has worked out a plan to examine lending and capital levels at individual banks each month to determine reserve requirements for them, the China Securities Journal reported.
Banks may face higher mandatory requirements if their capital adequacy ratios fall below a standard set by the central bank, the Journal reported, citing an unidentified person close to the People's Bank of China.
Zhou Xiaochuan, China's central bank governor, said in a speech in mid December that Beijing will strengthen regulation of the country's top five too-big-to-fail lenders, while gradually implementing a flexible saving and lending rates policy.
China is grappling with the fastest inflation in 28 months and trying to mop up excess liquidity after a year of record credit growth fueled the nation's rebound from the global financial crisis. Lending is likely to have topped the government's 2010 target maximum of 7.5 trillion yuan after banks extended 99 percent of that amount in the first 11 months of last year, the Bloomberg reported Wednesday.
"This will enable the central bank to target abnormal lending and absorb liquidity more effectively," said Deng Ting, a Beijing-based analyst at Guodu Securities Co. "The PBOC found itself incapable of doing much after new loans exceeded last year's quota. They hope to change that."
Any capital adequacy shortfall would be multiplied by a so- called stability factor to calculate differentiated reserve requirements, the report said. Affected banks would be required to adjust lending immediately, the Securities Journal reported.
The People's Bank of China will grant a nine-month grace period before fully implementing the rules, it added.
People's Daily Online
Banks may face higher mandatory requirements if their capital adequacy ratios fall below a standard set by the central bank, the Journal reported, citing an unidentified person close to the People's Bank of China.
Zhou Xiaochuan, China's central bank governor, said in a speech in mid December that Beijing will strengthen regulation of the country's top five too-big-to-fail lenders, while gradually implementing a flexible saving and lending rates policy.
China is grappling with the fastest inflation in 28 months and trying to mop up excess liquidity after a year of record credit growth fueled the nation's rebound from the global financial crisis. Lending is likely to have topped the government's 2010 target maximum of 7.5 trillion yuan after banks extended 99 percent of that amount in the first 11 months of last year, the Bloomberg reported Wednesday.
"This will enable the central bank to target abnormal lending and absorb liquidity more effectively," said Deng Ting, a Beijing-based analyst at Guodu Securities Co. "The PBOC found itself incapable of doing much after new loans exceeded last year's quota. They hope to change that."
Any capital adequacy shortfall would be multiplied by a so- called stability factor to calculate differentiated reserve requirements, the report said. Affected banks would be required to adjust lending immediately, the Securities Journal reported.
The People's Bank of China will grant a nine-month grace period before fully implementing the rules, it added.
People's Daily Online
