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600b yuan loans in one week may prompt PBOC to raise reserve ratio

By Song Jingli (chinadaily.com.cn)
Updated: 2010-01-11 15:22
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New yuan-denominated loans in China amounted to 600 billion yuan ($87.9 billion) in the first week of January 2010, and some analysts say the central bank is likely to raise the deposit reserve ratio in February to curb excessive lending, the Economic Observer reported on Monday.

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Banks are eager to lend as soon as possible because they have accumulated a lot of projects in need of loans since the fine-tuning of the moderately loose monetary policy in the third quarter of 2009. They also hope to gain a larger share in the 7.5 trillion yuan credit growth cap set for this year, according to the Economic Observer.

The People's Bank of China, the central bank, raised its three-month-bill rate by four basis points on January 7, which was seen as an obvious signal of tightening.

The central bank may begin window guidance in the second or the third tenth of January and may raise the deposit reserve ratio after the Chinese Spring Festival, which falls on February 14 this year, said Shi Lei, a Bank of China analyst focusing on the global financial market.

 
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