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Bank lending over 500b yuan in Feb: Report

By Hu Yang (chinadaily.com.cn)
Updated: 2011-03-10 15:49
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China's banks might extend over 500 billion yuan ($76 billion) worth of new loans in February, the China Securities Journal reported Thursday.

The figure marks an obvious decline, compared with 1.04 trillion yuan in January and 700 billion yuan in February last year. The report said the number has been driven down by tightened policies and the long Spring Festival holidays, which lasted from Feb 2 to 8.

The figure is in line with a previous report by the newspaper, which said new loans for February would amount to less than 600 billion yuan.

Analysts say the central bank's decision to further raise the requirement reserve ratio or not hinges on the February growth of funds outstanding for foreign exchange.

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China's central bank bought 501.6 billion yuan worth of foreign exchange from commercial banks in January, a 24 percent jump in purchases from December, stirring speculation that required reserves would be raised again.

The central bank has raised the requirement reserve ratio eight times since last year to mop up excessive liquidity, and the ratio for some large banks stands at a record high of 19.5 percent.

The market is divided on the reserve ratio issue. Some believe rising crude oil prices and rebounding food prices in the domestic market will drive up CPI, while others fear more tightening measures will affect economic growth.