Chinese Banks Approach Lending Limit for 2010

By Cheng Zhiyun
Published: 2010-12-14

Economic Observer Online
December 10, 2010
Translated by Zhang Chao
Original Article:
[Chinese]




The People's Bank of China issued its monthly financial data report at 3pm last Friday, December 10. According to the report, the value of new RMB loans issued in November reached 564 billion yuan.

Given the offical lending ceiling of 7.5 trillion yuan for 2010, which was set by the central government earlier in the year, banks will only be allowed to issue 80 billion yuan worth of new loans in December if they are to remain within the set quota.

According to market sources, in the first 20 days of November, over 600 billion yuan worth of new loans had already been issued, originating mainly from commercial city banks and rural credit cooperatives. In the final 10 days of the month, supervisors required some commercial banks to cancel some of these loans in order to keep total new lending for the month below 600 billion yuan.

A source told the EO that "as monetary policy continues to tighten, commercial banks will have less incentive to lend in December. It is more than likely that the total value of new loans for the year will be kept below 7.8 trillion yuan."