(Yicai Global) Nov. 20 -- China's National Interbank Funding Center, an institute under the central bank, has cut its benchmark loan prime rate for both one-year and five-year loans by 5 basis points in order to cut funding costs for the real economy.

The center announced today that its market-oriented LPR was now 4.15 percent for one-year lending and 4.80 percent for five-year loans.

The People's Bank of China introduced the LPR scheme in 2013, but until August this year the system was not market-oriented and gave banks much more freedom to decide their own interest rates. PBOC unveiled a new rule on Aug. 17 that forced banks to use the LPR as a benchmark.

The center sets new LPRs at 9.30 a.m. on the 20th day of every month. Including today's cut, the center has reduced the one-year LPR twice to date, each time by 5 basis points. Today marked the first time it decreased the five-year rate.

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

Editor: James Boynton