China’s top banking regulator slashed the amount of money small and midsize banks have to keep on hand to cover losses from bad loans, aiming to bolster lending to virus-stricken businesses, reported Caixin.
The China Banking and Insurance Regulatory Commission (CBIRC) issued a notice making the change, people with knowledge of the matter said. The document hasn’t been made public, but some banks received instructions from local regulators to make the adjustment, said Caixin sources.
The move will further reduce banks’ requirements for loan-loss provisions from the current range of 120%–150% of nonperforming loans. The ratio requirement will vary from bank to bank based on actual conditions.