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CBRC may require new bank loan reserve ratio

By Ren Jie (chinadaily.com.cn)
Updated: 2010-09-08 14:43

China's banking regulator may require commercial banks to set aside 2.5 percent of their loans as reserves, the Shanghai Securities News reported Wednesday.

Trade surplus not worrisome: Chen Related readings:  China's central bank to raise 0.5% reserve ratio  Central Bank likely to raise reserve ratio: Analysts  More bank reserve ratio hikes expected  Bank reserve ratio raised to curb lending

The nation's joint-equity banks may also require maintaining reserves of 2.4 percent of their total loans, according to a plan under discussion, the newspaper said.

The implementation of the plan would intensify regulators' control on loan risks, some analysts say. But some also said the move would impact banks' desire for lending and impair lenders' earning power, according to the report.

The requirement will have little impact on large banks, while exert big pressure on smaller lenders, the report said.

So far commercial banks are required to set aside 150 percent of non-performing loans as provisions. At the end of July, commercial banks' non-performing coverage ratio was up to 188 percent, said the paper.