(Yicai Global) Aug. 20 -- China's National Interbank Funding Center set the country's first new market-oriented loan prime rate benchmarks at 4.25 percent for one-year lending and 4.85 percent for five-year loans today, as the country looks to cut funding costs for the real economy.

The center will set new LPRs at 9.30 a.m. on the 20th day of every month, the People's Bank of China said in a statement on Aug. 17, adding that banks should use the rates as a primary reference when lending money. 

The PBOC introduced the LPR scheme in 2013 but the system's previous iteration was not market-based and gave banks more freedom to decide their own loan rates. Under the old program, the one-year LPR had been 4.31 percent for some time.

Companies offered loans at rates not in line with the benchmarks should report the lender to official watchdogs and self-regulating industrial bodies, the PBOC said. 

Editor: James Boynton