China's commercial banks are making efforts to curb the
excessive growth in credit supply in a bid to meet their goals this
year, 21st Century Business Herald reports.
Currently, most lenders are tightening note financing as a
measure to curb the credit supply. Although statistics show that
China's note financing value slipped 17.2 billion yuan (US$2.25
billion) in May, the central bank is still facing challenging
situations in excessive growth in credit supply.
Statistics show that in the first five months of this year,
banks granted 2.09 trillion yuan in new loans, up 311.5 billion
from the same period in 2006.
China's newly-added loans surged to 1.42 trillion in the first
quarter, up 13 percent from the same period last year and almost
half of the quota set by the central bank for the whole year.
Data from the central bank indicate that in the first quarter of
this year, the new note financing of all financial institutions in
China reached 81.9 billion yuan. In April, domestic banks granted
422 billion yuan in new loans, bringing the amount for the first
four months to 1.8 trillion yuan - more than half the total for the
entire 2006.
An insider at a medium-sized commercial bank said that the
previous booming note financing business is becoming dull now.
According to statistics from www.chinacp.com.cn, a website
specialized in note trading, at 4:30 p.m. on June 14, only 15
financial institutions, including Bank of China and China
Construction Bank, quoted prices for notes on discount, with the
lowest discount rate reaching 3.6 percent.
But on January 31 this year, a total of 25 financial
institutions quoted prices for notes on discount with the lowest
rate being 2.76 percent.
Executives at some commercial banks said other measures to curb
credit supply growth include controlling new loans, raising reserve
requirements for branches and sub-branches, and adjusting the loan
structure.
Some domestic commercial bank headquarters have set deposit-loan
ratio and note financing restrictions for their branches in
Shanghai, so Shanghai's credit supply growth experienced a slowdown
recently.
(China Daily June 19, 2007)