China’s central bank on Monday unveiled details of a previously signaled cut in the portion of deposits that some financial institutions need to keep on reserve, making more money available for lending as economic growth slows.
The People’s Bank of China said it will cut the reserve ratio by 0.5 percentage point for some banks that focus on lending to the rural sector and smaller companies.
It said in a statement on its website that the move, which takes effect June 16, also applies to financial leasing and auto financing firms.
The move will affect about two-thirds of the nation’s city commercial banks, the PBOC said.
In April, the PBOC cut the reserve ratio for county level rural commercial banks by 2 percentage points and trimmed the ratio for rural cooperatives by 0.5 percentage point. That move took effect April 25.
Late last month, the State Council, or cabinet, promised a broader cut in the bank reserve requirement ratio to boost economic growth.
The central bank also said on Monday that the measures don’t signal a monetary policy change. It added that it is maintaining its prudent monetary policy.