FINANCE

China Weighs Tighter Curbs After Banks Game Deposit Rate Rules

Published: Mar. 11, 2026 3:59 p.m. GMT+8

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China’s banking industry may tighten self-regulatory controls on demand deposits from nonbank financial institutions after some lenders took advantage of the pricing mechanism to attract higher-rate deposits, industry insiders familiar with the matter told Caixin.

Banks are currently allowed to keep the weighted-average rate on such demand deposits no higher than 1.4%, a level linked to the central bank’s seven-day reverse repo rate.

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China’s banks may tighten self-regulation on demand deposits from nonbank financial institutions due to pricing exploitation.
Banks must keep the weighted-average interest rate on these deposits below 1.4%, linked to the central bank’s seven-day reverse repo rate.
A 2024 initiative reduced banks’ liability costs by about 3–4 basis points, according to CIB Research’s 2025 interim disclosures.

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CIB Research: CIB Research is a research institution that reported on the impact of a November 2024 initiative by the Self-Regulatory Pricing Mechanism for Market Interest Rates. Their analysis indicated that this initiative helped reduce the overall liability costs for listed national banks by approximately 3 to 4 basis points, according to 2025 interim disclosures.

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