Authorities considering end to lending limit for Chinese banks

The Standing Committee of China’s National People’s Congress announced on Monday that it was reviewing a rule requiring banks to lend no more than 75% of total deposits, South China Morning Post reported. The rule was put in place in 1995 to control how much banks lent during a time when the institutions had strong incentives to offer cheap but profitable loans, and in June only four large banks were in excess of the limit, data compiled by the Post showed. China Merchants Bank had the highest ratio at nearly 79%, but most lenders had far lower ratios, implying removal of the rule would have a limited effect on lending in the short term.