Chinese banks will not pursue specific targets for lending to private firms, state media said on Monday, after remarks made by the head of the country’s banking regulator triggered a sharp selloff last week.
Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said on Thursday that big banks should allocate at least one third of new loans to the private sector over the next three years. Small- and medium-sized banks should aim for two-thirds of total new loans.
Investors were spooked by the comments, however, fearing quotas could increase lending to smaller, riskier firms with little history of holding debt.
“The targets are not ‘hard’ indicators for each bank,” the state-owned China Securities Journal said. “The regulatory authorities will not propose specific targets for a single bank.”
Beijing is unveiling a suite of policies aimed at easing financing conditions for the cash-starved private sector, which is seen as key to buoying economic growth in coming quarters. At the same time, officials are being instructed to cut down on financial risks in line with the deleveraging campaign conducted earlier this year.
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