China's commercial banks are making efforts to curb the excessive growth in
credit supply in a bid to meet their goals this year, 21st Century Business
Currently, most lenders are tightening note financing as a measure to curb
the credit supply. Although statistics show that China's note financing value
slipped 17.2 billion yuan (US$2.25 billion) in May, the central bank is still
facing challenging situations in excessive growth in credit supply.
Statistics show that in the first five months of this year, banks granted
2.09 trillion yuan in new loans, up 311.5 billion from the same period in 2006.
China's newly added loans surged to 1.42 trillion in the first quarter, up 13
percent from the same period last year and almost half of the quota set by the
central bank for the whole year.
from the central bank indicate that in the first quarter of this year, the new
note financing of all financial institutions in China reached 81.9 billion yuan.
In April, domestic banks granted 422 billion yuan in new loans, bringing the
amount for the first four months to 1.8 trillion yuan - more than half the total
for the entire 2006.
An insider at a medium-sized commercial bank said that the previous booming
note financing business is becoming dull now. According to statistics from
www.chinacp.com.cn, a website specialized in note trading, at 4:30 p.m. on June
14, only 15 financial institutions, including Bank of China and China Construction Bank, quoted prices for notes on discount,
with the lowest discount rate reaching 3.6 percent.
But on January 31 this year, a total of 25 financial institutions quoted
prices for notes on discount with the lowest rate being 2.76 percent.
Executives at some commercial banks said other measures to curb credit supply
growth include controlling new loans, raising reserve requirements for branches
and sub-branches, and adjusting the loan structure.
Some domestic commercial bank headquarters have set deposit-loan ratio and
note financing restrictions for their branches in Shanghai, so Shanghai's credit
supply growth experienced a slowdown recently.
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