(Yicai Global) Jan. 2 -- The People's Bank of China, the central bank, will gradually raise the reserve requirement ratio for customer deposits in payment institutions this year. PBOC will increase the ratio to 50 percent from the current 20 percent, with the first expected rise to take place in February, officials said. The move aims to better protect savers' deposits and prevent online finance risks.

Considering the tightening of cash flow before the Spring Festival, the Chinese New Year, PBOC will maintain the current reserve ratio of 20 percent in January 2018, but it will increase it by 10 percent each month from February to April, the bank officials said. PBOC will adjust open market operations according to the liquidity situation and maintain the stability of the banking system during that period, state-run Xinhua News Agency reported yesterday.

Customer reserves refer to the funds deposited by customers in payment institutions as well as the funds collected or paid by the same organizations. In order to safeguard the rights and interests of the customers, the central bank will demand a certain ratio of central deposits to prevent payment institutions from using these funds without authorization.

The central deposit system for customer reserves deposited in payment institutions is an important measure taken by PBOC to prevent online finance risks, a policy which has been in practice since the beginning of last year, the officials added.

As the increase in the deposit ratio will be spread over three months, it will have little effect on the overall liquidity, but the profitability of payment institutions will be affected considerably, predicted a report released by China International Capital Corporation, an investment bank.