Midsize Lenders Set to Stand Out in Latest Reserve-Rate Cut
Midsize Chinese banks will likely benefit most from the central bank’s latest targeted cut in the reserve requirement ratio (RRR), although the policy likely won’t significantly change the loan profile of the overall banking industry, analysts say.
To encourage more lending to the disadvantaged population, college students and small businesses, commercial banks will be allowed to set aside less cash as reserves after meeting certain targets beginning next year. Each bank’s RRR will be cut by 0.5 percentage point, from the current range of 13.5% to 17.0%, if at least 1.5% of its new loans are extended to those less-creditworthy borrowers. A deeper cut of RRR by 1.5 percentage point will kick in if that ratio is at least 10%.
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