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Central bank cuts target for thousands of small and medium-sized banks experts say preferential reserve ratio framework is on its way

iconMay 7, 2019 07:49
Source:SMM
09-29-27-33 seconds before the stock market officially opened yesterday, the central bank announced a targeted cut.

SMM News: 09-29-27-33 seconds before the stock market officially opened yesterday, the central bank announced a targeted cut.

On 6 May, in order to implement the requirements of the executive meeting of the State Council, establish a policy framework for implementing a lower reserve requirement ratio for small and medium-sized banks, and promote the reduction of financing costs for small and medium-sized enterprises, the people's Bank of China decided to start on May 15, 2019, For the local, service county small and medium-sized banks, the implementation of a lower preferential deposit reserve ratio. For rural commercial banks that operate only in their own county-level administrative areas or have branches in other county-level administrative areas with assets of less than 10 billion yuan, the deposit reserve ratio of the same grade as that of rural credit cooperatives is currently 8 per cent.

About 1000 county agricultural and commercial banks can enjoy the preferential policy, releasing about 280 billion yuan of long-term funds, all of which will be used to make loans to private and small and micro enterprises, the central bank said.

"it is the general trend to serve small and micro enterprises, and the regulatory departments have corresponding rigid requirements and soft guidelines. Commercial banks do not have any obstacles in understanding this, and banks also have the enthusiasm to work hard to promote this work and serve small and micro enterprises well." A relevant person of a regional listed bank told reporters at the first time after seeing the relevant policies.

The person believes that banks and small and micro enterprises now have at least two important points in common: first, with the progress of science and technology, it is less difficult for big data to collect daily management data from many aspects, such as taxation, industry and commerce, and the enterprises themselves. It solves the problem of information asymmetry between banks and small and micro enterprises in the past, can solve the chronic illness of some small and micro enterprises whitewashing reports or no statements at all, and reduces the risk of bank credit. From this point of view, banks are more and more capable of serving small and micro enterprises; Second, banks are also looking for basic customers. For commercial banks, the core competitiveness is that they have a large number of basic customers. If banks want to survive, they need a large customer base. In this process, the banks themselves are willing to increase investment and bear costs in order to lay the foundation for comprehensive financial services in the future. For banks, today's small and micro enterprises may be future retail, investment banking, overseas finance and many other potential customers, but also an important part of the bank clientele ecosystem.

On May 6, some small and medium-sized banks in the A-share market welcomed the "rise" of the policy: Qingdao Bank closed up 5.1%, while some bank shares closed in red. And the overall decline in the banking sector was much smaller than the overall decline in the market as a whole.

In addition, Lianping analysis believes that the release of 280 billion yuan of funds is not the "end point" of directional adjustment, and the possibility of implementing a certain deposit ratio preference for large commercial banks after the central bank reaches a certain standard still exists in the future. In the future, targeted regulation may not be the only means. Innovative credit policies to support reloans, expand the scope of qualified collateral for monetary policy instruments such as reloans, increase bond financing support tools for private enterprises, and expand TMLF, and so on. Have the potential to become a tool option for targeted adjustment policies.

Central banks
rate cuts
reserves
small and medium-sized banks

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