CHINA'S banking regulator is doing an in-depth analysis of the rules on loan-to-deposit ratio and may unveil alternative measures to better supervise the sector, the head of the watchdog said in Beijing yesterday.
The loan-to-deposit ratio regulates the maximum amount of loans a lender can extend based on the deposits it holds for a certain period of time. The ratio is now capped at 75 percent.
Shang Fulin, chairman of the China Banking Regulatory Commission, pointed out that some small banks have failed to meet the requirement and the regulator is studying whether to introduce alternative steps to supplement the existing rules.
Banks face mounting pressure from eroding margins as China seeks a more liberal interest rate regime. Meanwhile they compete aggressively for deposits as the central government promotes domestic consumption which may see fewer consumers saving. Banks regularly appeal to the CBRC to ease the controls, arguing that more lending will generate higher profits and underpin the nation's economic growth.
Commercial lenders on the mainland maintained the loan-to-deposit ratio at 65.3 percent by the end of last year, 0.5 percentage point up from a year earlier, but still below 75 percent, the CBRC said.
Shang also said the CBRC will introduce credit policies in response to the latest property market controls.
Earlier, Yi Gang, deputy governor of the central bank, said discussions are being held on whether borrowing costs should be raised for homebuyers in regions where housing prices are rising too fast.
The State Council said last Friday the 20 percent tax on profit from selling resale homes should be strictly levied.
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