China considers removing regulation on loan-to-deposit ratio

BEIJING - China may remove a 75 percent loan-to-deposit ratio stipulation, according to a draft discussed during the bimonthly legislative session that started Monday.

The ratio will instead be regarded as a liquidity-monitoring indicator, according to a draft amendment to China's Law on Commercial Banks, which was deliberated by the National People's Congress Standing Committee.

China has kept the 75 percent ratio since the law was enacted and put into effect in 1995.

Shang Fulin, chairman with the China Banking Regulatory Commission (CBRC), said that the stipulation of loan-to-deposit ratio no longer meets the need of current development of commercial banks, and the removal will boost real economy in line with international convention.

According to statistics by the CBRC, as of the end of 2014, 271 commercial banks exceeded a loan-to-deposit ratio of 70 percent, of which 86 exceeded 75 percent.

The amendment is meant to steady economic growth under the pressure of downturn of the economy, said Shang.