(Yicai Global) Jan. 3 -- China's central bank intends to adjust the calculation of some lender's reserve requirement ratios to cut borrowing costs for small and micro-sized firms.
The People's Bank of China will permit more banks to use some cash reserves to lend as much as CNY10 million (USD1.5 million) to each of these smaller businesses, double the amount they could previously provide, the central bank said in a statement posted on its website yesterday.
The adjustment will "guide financial institutions to better meet the demand for loans from small and micro firms so that more will benefit," the PBOC said.
In recent years, adjustments in RRR have become one of the common monetary policy tools that the central bank uses to release more liquidity into the financial system. The current ratio is 14.5 percent for large financial institutions and 12.5 percent for small and medium-sized ones.
Editor: Emmi Laine