Year-ender: Major financial news of China
Central bank cuts the reserve requirement ratio three times
China's central bank, the People's Bank of China, cut the reserve requirement ratio three times within the year to bolster the economy.
China's central bank announced on Sept 6 it would cut the reserve requirement ratio for financial institutions by 50 basis points from Sept 16.
The People's Bank of China also announced on May 6 it would cut the reserve requirement ratio, or RRR for small and medium commercial banks starting on May 15.
After the cut, the RRR for about 1,000 rural commercial banks that operate in counties will be 8 percent, down from the current level of 10 percent to 11.5 percent for small-sized banks, according to the central bank.
Lowering the banks' reserves will inject about 280 billion yuan ($41.23 billion) for long-term usage. And the freed fund will be used for providing more loans to private, micro and small companies, the bank said in a statement.
That will further reduce funding cost for micro and small companies. It is also an implementation of the State Council's pledge to set up a lower RRR policy framework for small and medium-sized banks, according to the statement.
On Jan 4, the PBOC decided to cut the reserve requirement ratio by 1 percentage point in a move to increase loan funding sources of small, micro, and private businesses.
