BEIJING Feb 20 China's central bank this year
is extending a programme that allows financial institutions that
support rural finance and small enterprises to apply for a lower
required level of cash reserves, three sources said on Monday.
The People's Bank of China (PBOC) in 2014 launched a
programme that lets banks apply for a lower reserve requirement
ratio (RRR) - the amount of cash they must hold as reserves - if
they meet certain criteria for lending to the agricultural
sector and small companies.
PBOC is now assessing banks' 2016 loan books, with those
meeting requirements eligible for the lower RRR, the sources
said, as the central bank offers an incentive for banks to lend
to underserved sectors of the economy.
The targeted RRR cuts were implemented or extended in
February in past years.
In February 2016 the central bank said it would cancel the
preferential treatment for banks that didn't meet standards but
maintain it for most.
The standards require that minimum capital adequacy ratios
are met, as well as mandating 50 percent of new loans in the
last year were to the agricultural sector, while half of all
outstanding loans were made to small companies.
"Under the routine assessment, eligible banks can decide
whether or not to apply (for the lower RRR)", said a source at a
regional branch of the PBOC.
An executive at a privately run bank said the bank has
applied but not yet received approval from PBOC.
Officials at the PBOC weren't immediately available for
China has modestly tightened policy in recent months by
raising key money rates, though overall credit growth remains
strong, hitting an all-time high in January.
(Reporting by Li Zheng; Writing by Elias Glenn; Editing by Shri