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Banks to loosen grip on loans

By Ren Jie (chinadaily.com.cn)
Updated: 2010-02-02 11:47

The head offices of China's commercial banks approved to loosen the flow of credit on February 1 again after tightening it in late January, the National Business Daily (NBD) reported today.

An insider at a State-owned commercial bank said yesterday that their head office has approved the line of credit and they have begun to issue loans to both the public and the private sector again.

Those who received approval for the line of credit but failed to get money in January will now receive the money, the newspaper reported. It was reported that commercial banks were told to control the pace of lending and suspend extending credit in late January as loans boomed in early January. Chinese banks extended nearly 1.6 trillion yuan ($234.36 billion) worth of new yuan loans in January, the Economic Information Daily reported yesterday.

But economists did not expect an interest rate increase in the near future as the central bank has already raised the deposit reserve ratio by 0.5 percent in January to rein in the aggressive bank lending.

The trend of banks’ lending will become smooth and steady in the future, NBD reported, citing an unnamed analyst.