THE central bank said yesterday that it will extend a preferential program for some banks that will free up additional funds for lending, as long as they channel money to weaker, cash-starved sectors of the economy. But it also warned that some banks will no longer enjoy such preferential treatment after a recent review found they had failed to adhere to “standards” intended to channel loans more directly to rural areas and small companies. The statement confirmed a report Monday that the central bank is extending a program that allows financial institutions that support rural finance and small enterprises to apply for a lower required level of cash reserves. Many banks are reluctant to lend to small, private firms, which are considered riskier than State-owned companies, and to farmers who have little collateral, though the government has launched a pilot program to allow farmers to use their land and property to help secure loans. The People’s Bank of China launched a program in 2014 that allows banks to apply for a lower reserve requirement ratio (RRR) if they meet certain criteria for lending to more vulnerable areas of the economy. RRR is the amount of cash as a percentage of deposits that banks must park at the central bank as reserves. (SD-Agencies) |