THE central bank Tuesday issued details of the three phases in which it plans to cut the reserve requirement ratio (RRR) for county-level rural commercial banks, a step it had announced May 6.

The People’s Bank of China said the RRR cut aimed to free up about 280 billion yuan (US$40.53 billion) for such banks, in a bid to help small companies during an economic slowdown.

It added that the reduction would be spread over three phases, May 15, June 17 and July 15.

On Tuesday, the central said it had cut the RRR by 100 basis points May 15 as part of the planned reductions.

It will next cut the RRR by another 100 basis points June 17, and lower the ratio for county-level rural commercial banks to 8 percent July 15, the central bank added.

The People’s Bank of China said May 6 that it will cut the reserve requirement ratios (RRRs) for small and medium-sized banks effective from May 15, in a targeted policy measure.

The required reserve ratio for rural commercial lenders that serve local companies in the county where the bank operates or have less than 10 billion yuan (US$1.5 billion) of assets will be lowered to 8 percent, the People’s Bank of China said May 6.

About 1,000 county-level rural commercial banks are qualified for the reduction, and all the newly released funding will be used in loans to private and small companies, the central bank said.

The current reserve requirement ratio for rural commercial lenders is at 11 percent, according to Zhou Guannan, senior fixed-asset analyst at Hua Chuang Securities Co.

The move comes after the State Council last month called for changes to allow medium and small-sized banks to set aside less money in reserves.

The State Council said April 17 that a policy framework would be set up to implement relatively low RRRs for small and medium-sized banks.

Financial News, the central bank’s newspaper, said the country still has room for targeted reserve ratio cuts in a previous article.(SD-Agencies)