Close eye on bank lending
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China's central bank will closely monitor bank lending this year and assign different reserve requirement ratios for commercial lenders based on their capital strength, the Shanghai headquarters of the People's Bank of China said in a statement Wednesday.
The statement confirmed earlier media reports the PBOC is planning to begin a monthly review of required reserves for banks this year as the country shifted its monetary policy from relatively easing to prudent this year.
There had been reports that banks would face different reserve ratio requirements depending on their role in the economy this year. Big banks will probably face a higher ratio by having to freeze more funds with the PBOC.
"We will prioritize keeping prices stable with more flexible and effective measures," the Shanghai headquarters of the PBOC said.
China raised the reserve requirement ratio six times in 2010 and once earlier this month. The benchmark interest rates were raised twice in the last three months of 2010.
China's new yuan lending beat the official goal of 7.5 trillion yuan in 2010 when banks lent 7.95 trillion yuan (US$1.2 trillion) of yuan-denominated loans.
Meanwhile, China's M2, the broadest measure of money supply, grew a faster-than-expected 19.7 percent in 2010.
Meanwhile, banks in Shanghai will strictly control new loans to the real estate industry to curb risks, the Shanghai Bureau of the China Banking Regulatory Commission said yesterday.
Highly-risky property developers should also be listed so that banks have access to information about them, the local banking regulator said yesterday.
"We should control new loans and adjust existing loans to the real estate industry to improve the credit structure," it said.
