PBOC to Further Reduce Lending Rates as Covid-19 Continues to Spread(Yicai Global) March 16 -- The People's Bank of China plans to reduce lending rates further, mimicking the central banks of other nations as the novel coronavirus continues to spread worldwide.
PBOC also has plans to reduce the reserve requirement ratio today to free up CNY550 billion (USD78.6 billion), Sun Guofeng, director of the bank's monetary policy department, said at a press conference yesterday.
China must pay more attention to changes in real interest rates, Sun said, adding that China's central bank will continue to take action, such as guiding banks to support the real economy and reducing the cost of corporate financing, to help companies get back to work and so restart economic development.
The bank has already dished out CNY800 billion through a special re-lending scheme since Jan. 31 and refinanced CNY184 billion worth of loans. The first CNY300 billion of the re-lending targeted firms making or transporting medical supplies and other necessities, with the remaining CNY500 billion, at a further discount, going toward helping companies get back to work. The scheme offers low-cost borrowing for micro, small and medium-sized companies.
Banks had also issued CNY182 billion worth of preferential loans to 4,708 companies as of March 13, with actual costs to borrowers at 1.28 percent on average, Sun said. Those issuing loans using the CNY500 billion portion of the re-lending program had issued CNY107.5 billion in preferential loans as of March 13, with CNY20.5 billion (USD2.9 billion) targeting agriculture and at a weighted average interest rate of 4.4 percent.
Yuan loans soared by CNY4.24 trillion (USD606 billion) in the first two months of this year, rising by CNY130.8 billion more than a year earlier. Companies made up CNY4 trillion of the gain, according to PBOC data published March 11.
Chinese banks have provided more than CNY1.4 trillion in credit to help fight the epidemic, an official at the China Banking and Insurance Regulatory Commission said at a press briefing yesterday.
Editor: James Boynton
