The government has given State-owned banks additional credit quotas for deployment to the nonfinancial sector by the end of this month, pumping more money to ease the funding crunch due to the relatively tight monetary environment, sources familiar with the matter said on June 13.
A manager with a leading State-owned bank who declined to be named said his bank has been given an additional quota and the funds are expected to be issued by the end of June, in order to support the nonfinancial sector.
The quota is not part of the originally sanctioned full-year lending quota, he said, adding that the overall credit environment had remained tight in the past few months as the government has stepped up its deleveraging efforts.
The additional credit quota development has also been confirmed by another unnamed source at one of the top four major State-owned banks. The move comes after data in May from the central bank reflected a relatively tight monetary environment.
Chinese lenders disbursed 1.15 trillion yuan ($180 billion) of loans in May, compared to 1.18 trillion yuan in April, data from the People’s Bank of China, the central bank, showed on June 12.
The overall social financing, which is a broad measure of credit and liquidity in the economy, dropped to 760.8 billion yuan in May from 1.56 trillion yuan in April, it said.
Economists have attributed the decline to the government’s crackdown on financial risks, where slower growth of nonstandard credit assets — assets that are not on bank balance sheets — has played a key role leading to overall slower social financing expansion.
Some economists are of the view that the central bank might lower the banks’ reserve requirement ratio in the second half of the year and keep liquidity relatively loose, while taking steps in guiding the market funding rate amid expectations of a US interest rate rise.
Earlier last month, the National Development and Reform Commission held a closed-door meeting with China’s major commercial banks, discussing details of a plan to lend more support for lending to small and medium-sized enterprises.