(Yicai) Jan. 20 -- The credit structure of commercial banks in China is transforming amid the country's continuous intensification of coordinated fiscal and monetary policies to boost domestic demand, with business loans emerging as lenders' key focus, while consumer loan reviews have become more stringent.

The overall lending terms for business loans have been significantly relaxed, with interest rates hovering at a historically low level, according to a recent survey of multiple banks conducted by Yicai. In addition, credit limits and product flexibility have been enhanced.

The interest rate for unsecured business loans mostly stands at around 3 percent, credit managers from several state-owned commercial lenders told Yicai. For customers who meet qualifications and collateral eligibility requirements, the annualized interest rate for secured business loans can generally be controlled at around 2.5 percent, while for high-quality existing customers, there is room for further decline in the actual interest rate, they said.

The business loan structure offered by joint-stock commercial banks is more flexible, with a customer manager at a joint-stock bank in East China telling Yicai that the lender sets separate pricing for business loans based on the unsecured and secured categories.

The interest rate for secured loans is dynamically adjusted according to the age, location, and assessed value of the mortgaged property, and the minimum interest rate available for some high-quality collateral assets has dropped to 2.3 percent, the manager noted.

City commercial banks are adopting a more aggressive competitive stance. The one-year interest rate for China Resources Bank of Zhuhai's secured business loans can be as low as 2.2 percent, with a maximum credit limit of CNY20 million (USD2.8 million) per customer, while also providing a variety of repayment methods to meet clients' different cash flow management needs.

The continuous decline in deposit interest rates has provided practical room for banks to lower business loan rates, Dong Ximiao, deputy director of the Shanghai Institution for Finance & Development, told Yicai. Lowering business loan rates can increase the disbursement of such loans and help lenders compete for high-quality customer resources, Dong added.

However, as business loan rates keep declining, the pricing space for commercial banks' personal consumer loans tends to narrow, with annualized interest rates generally maintained at around 3 percent.

Under the current regulatory requirements and risk pricing framework, consumer loan products with interest rates below 3 percent that once appeared in the market have generally been withdrawn, multiple insiders told Yicai.

For instance, Industrial and Commercial Bank of China's consumer loan annualized rates mostly range from 3.5 percent to 3.65 percent, which can be reduced to 3 percent for some customers with excellent credit qualifications, while the rates at China Construction Bank range from 3.4 percent to 3.55 percent. In comparison, those at China Merchants Bank are about 3 percent, a relatively low level among similar products.

Lenders' significantly tightened risk control is one of the reasons why consumer loan rates have failed to drop further.

Banks have obviously strengthened the review of the use of consumer loans and customer access conditions, a person from a joint-stock lender in the Yangtze River Delta region said to Yicai. Low-cost consumer loan funds are strictly restricted to compliant consumption scenarios to prevent them from being diverted to business operations or investment fields, the person noted.

There is still room for downward adjustment in the actual interest rates of some consumer loans, but borrowers are usually required to provide clear and verifiable consumption scenarios and relevant bills to lenders, which have relatively strict review processes, according to a person from the personal loan department of a joint-stock bank.

Editors: Tang Shihua, Martin Kadiev