SEVERAL Chinese banks yesterday lowered rates on some deposits of consumers in response to the government’s call to bolster up the economy.

Industrial and Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of Communications Co. cut two-year, three-year and five-year rates on certificates of deposits and other types by 10 basis points. After the reduction, the two-year certificate of deposit rate stands at 2.6%.

Authorities earlier this month urged banks to reduce premiums offered to savers over the benchmark deposit rate by 10 basis points across all tenors. While not mandatory, lenders that follow the request will have their scores boosted when the People’s Bank of China (PBOC) does its quarterly macroprudential assessment, Bloomberg News quoted sources as saying yesterday.

The move will lower funding costs at banks as policymakers have repeatedly called for the financial industry to help small businesses.

The PBOC has refrained by far from cutting rates on one-year policy loans that it extends to commercial banks. By reducing how much they pay for deposits, banks would be able to charge less for loans, especially to smaller businesses, while keeping their margins unchanged.

China’s largest banks can pay up to 50 basis points above the benchmark rates for time deposits, while smaller banks pay 75 basis points more.

China’s commercial banks have had some leeway in setting their own rates since the central bank scrapped direct control in 2005. The PBOC sets a ceiling and floor for rates through the interest rate self-disciplinary body.(SD-Agencies)