China Makes Targeted Reserve Requirement Reduce To Reinforce Lending To Small Corporations

China’s cabinet had in late September flagged a possible move, saying the government will take a number of measures, including tax exemptions and targeted reserve requirement ratio cuts to encourage banks to support small businesses.
The People’s Bank of China (PBOC) said on its website that it would cut the reserve requirement ratio (RRR) for some banks that meet certain requirements for lending to small business and the agricultural sector.
The reserve requirement rate will be cut a further 50 bps to 150 bps from the benchmark RRR rate for banks that meet certain requirements for lending to the targeted sectors, the PBOC said.
The PBOC said the move was made to support the development of “inclusive” financial services.
China’s central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lackluster private sector.

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