China to Scrap its loan-to-deposit Ratio Requirement

China is set to scrap the country’s longstanding loan-to-deposit ratio requirement, the latest in a series of measures to reform the country’s commercial banking sector and get more lending into a slowing economy.

China’s cabinet, the State Council, published its decision late on Wednesday as part of a draft amendment to the country’s 20-year-old commercial banking law.

Chinese banks at present are prohibited from lending more than 75 percent of their deposits, limiting their ability to offer loans and engage in other commercial activity.