(Yicai) April 16 -- A number of Chinese small- and medium-sized commercial banks in multiple provinces are issuing certificates of deposits with terms of between one and three years and interest rates of up to 3 percent.

Wenshang Rural Commercial Bank in eastern Shandong province issued three-year CDs for savings of no less than CNY200,000 (USD27,630) and interest rates of 3 percent, according to a China Securities Journal report released today. Shanxi Wenxi Rural Commercial Bank debuted a three-year CD product with a 2.95 percent interest rate.

The reason why regional banks issue CDs and offer relatively high interest rates is that small and medium banks lack edges in terms of deposit absorption, so they hike rates to lure more deposits, said Lou Feipeng, researcher at Chinese state-owned lender Postal Savings Bank of China.

Meanwhile, large-sized commercial banks are tightening the quota of their CDs, as not many of such products have been issued recently. For example, the apps of China Citic Bank and Bank of Beijing removed CDs with terms of over two years.

CD interest rates of large lenders are no longer favorable. The mobile app of China Construction Bank shows that its CDs have a minimum deposit of CNY200,000, terms of up to three years, and annual interest rates of no more than 2.35 percent, the same rate as the lender’s term deposit rate.

Large-sized lenders cut down on issuing products such as CDs and term deposits aim to lower the interest rates of their deposits to reduce liability-related costs, said Dong Ximiao, chief researcher at China Merchants Bank-China Unicom Consumption Finance.

Different banks have different paces and degrees in terms of deposit rate adjustments because of their diversity in factors, such as market competition, clients’ related business positioning, and liability structure, Dong noted, adding that the pressure of the declining net interest margin of small- and mid-sized banks, especially rural and commercial banks, has not yet fully appeared.

Editor: Futura Costaglione