Beijing, China (4E) – Chinese officials announced on Tuesday that the country’s banks increased lending in November compared to the previous month, as the world’s second largest economy seeks to maintain momentum on its recovery.
In November, Chinese financial institutions provided 522.9bn yuan ($83bn) in fresh loans, higher than the 505.2bn yuan it extended the previous month, according to data from the People’s Bank of China (PBOC) released on Tuesday. A survey by the Dow Jones Newswires showed a median forecast of 550bn yuan.
Beijing has been encouraging banks to lend to spur economic growth. The economy has slowed for seven consecutive quarters with the third quarter gross domestic product hitting a three-year low of 7.4 per cent due by slow domestic and overseas demand.
Historically, Chinese banks scramble at the end of the year to meet the loan-to-deposit ratio set by regulators, suggesting caution on offering loans. Analysts say that the Chinese central bank could lower the required reserve ratio to relieve liquidity strains and free up more funds for lending.
The PBOC has slashed interest rates twice in 2012 and cut the amount of cash that banks must set as reserves three times since December 2011 as they try to increase lending and boost growth.
The last time the PBOC cut the required reserve ratio was in May. It has not made any changes to the ratio since then, and instead relied on open-market operations including injection of liquidity into the banking system to reverse repos.