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CBRC plans differentiated requirements for banks

By Hu Yang (chinadaily.com.cn)
Updated: 2011-03-04 17:16

China's banking regulator may release new capital requirement rules, setting differentiated requirements for individual banks, caijing.com.cn reported Friday, citing a source from a State-owned bank.

The source said the new regulatory system, drafted by the China Banking Regulatory Commission (CBRC), has seven categories with 13 indicators, and each indicator is assigned a formula to calculate the capital requirements.

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It is certain that banks will have different capital requirements, since although the formula is universal, the data used by different banks differ vastly, the source said. It is similar to the central bank's formula for setting banks' required reserve ratios. The People's Bank of China, the country's central bank, has set differentiated required reserve ratios for certain banks, according to the report.

The move is the Chinese version of Basel III, the report said.

Previously, the CBRC divided banks into large-scale and small-to-medium scale categories, and banks belonging to the same scale have identical capital requirements, such as capital adequacy ratio and core capital adequacy ratio.

The source said the new regulatory system takes into account the practical conditions of individual banks and is fairer and more market-driven.

He added that the system is still waiting for final approval.