(Yicai Global) May 30 -- China's central bank and finance ministry channeled CNY80 billion (USD11.6 billion) of funds into the nation's commercial banks today via three-month treasury cash deposits.

The interest rate on the deposits rose, reflecting the need among some lenders for more deposits even though market liquidity is generally plentiful, an anonymous industry insider told Yicai Global.

The rate on the deposits stood at 4.01 percent, up 30 basis points from the previous such operation also involving three-month treasury deposits. The banks' need for cash tends to be higher at the end of each month to meet regulatory requirements, so the gain is normal and should not be over-interpreted, industry insiders said.

China's treasury cash is held at the People's Bank of China, but commercial banks also bid to hold part as short-term deposits through tenders, which can generate higher income for treasuries and boost market liquidity. An increase in interest rates on such deposits signals that demand at commercial lenders has risen to a certain extent.

"Recently, many banks, especially small- and mid-sized lenders, have faced difficulties in issuing interbank deposit receipts," a fixed income analyst told Yicai Global. "Counterparties are also being cautious amid tighter credit, resulting in pressure on bank debts and raising their demand for treasury cash."

The issuance of interbank deposit receipts by commercial banks has hit snags and interest rates have risen due to a number of financial risks recently. The weighted average interest rate on receipts has jumped. The three-month rate climbed to 3.1124 percent yesterday from 3.0620 percent on May 6, and is trending upward, according to figures from data provider Wind.