PBOC to Banks: Step Up Lending, Mortgage Approvals
Regulators are telling Chinese banks to step up loan approvals and keep mortgages flowing as the world’s second-largest economy remains on fragile ground due to COVID outbreaks this year, media reported Tuesday (May 24).
In a meeting with 24 financial institutions, the People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBIRC) urged lenders to “do their utmost to stabilize the fundamentals of the economy”, said the PBOC said in a statement Tuesday.
“Major financial institutions must assume their responsibilities, use all resources to effectively connect with credit demand and strengthen policy transmission,” according to a statement citing the meeting, Bloomberg reported.
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The statement also said banks should target small businesses, green projects, technology, energy and infrastructure.
In April, loan growth in China plunged to its lowest level in nearly five years as borrowing took precedence over COVID lockdowns. The PBOC cut the minimum mortgage rate for first-time home buyers and lenders cut the key benchmark rate for mortgages last week, the report said.
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“The statement appears to be guidance to encourage commercial banks to increase credit support to the real economy,” Peiqian Liu, an economist at NatWest Group Plc, told Bloomberg.
“This was not a new policy move, but it reinforced our view that monetary easing is now more focused on quantity-based policy easing. The credit impulse will likely rebound further to support the recovery from the lockdown,” Liu said.
To help stimulate the economy, Beijing is also pledging to cut annual taxes by more than 140 billion yuan ($21 billion) to 2.64 trillion yuan, increase infrastructure spending and postpone taxes. social security payments of 320 billion yuan through the end of this year, Aljareeza reported. .
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