China exempts quake cities from reserve ratio rise

BEIJING, May 16 (Reuters) - China's central bank has exempted banks in six quake-stricken cities from the latest increase in reserve requirements to help free up money for relief work, a local newspaper reported on Friday. Just hours after the outbreak of the 7.9-magnitude quake in southwest Sichuan province on Monday, the People's Bank of China increased the amount that lenders must hold in reserve at the central bank starting next Tuesday.

But six cities affected by the quake -- Chengdu, Mianyang, Deyang, Guangyuan, Yaan and Aba -- do not need to comply with the order, the National Business Daily said.

This was the first such exemption ever in China, the newspaper added.

The paper cited an unnamed official at the Chengdu branch of the central bank as saying the measure aimed to increase capital available for the region's disaster recovery.

The central bank said earlier that its Chengdu branch approved 1.5 billion yuan in refinancing for local lenders, especially rural cooperatives, and gave two cities, Chengdu and Mianyang, 500 million yuan extra each for their rediscount quotas.

On top of that, any extra demand from local lenders for central bank funds to be loaned would not be subject to quota limits, the central bank said.

Su Ning, central bank deputy governor, had previously said the People's Bank of China would lend a total of 3.3 billion yuan to Sichuan and 2.2 billion yuan to Gansu province.

The deadliest earthquake in three decades has already claimed 20,000 lives and China has said the death toll could exceed 50,000, with many victims still buried under the rubble.

The quake also destroyed countless roads, factories, schools, offices and houses. (Reporting by Langi Chiang; Editing by Ken Wills)