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PBoC to widen deposit definition to boost banks' lending capacity

China’s central bank will broaden the scope of deposits next year to boost banks’ lending capacity and potentially add trillions to the RMB5.5 trillion currently available, Bloomberg reported, citing analysts at Credit Agricole CIB and Guotai Junan Securities. Specifically, the PBoC will include savings held by lenders for non-deposit-taking financial institutions into bank deposits starting in 2015, according to a Xinhua report Monday, which itself cited unidentified lenders. Economists at Guotai Junan wrote in a note that while the move could theoretically release RMB5 trillion (US$800 billion) of bank credit, “due to the economic downturn, credit slowdown and banks’ reluctance to lend, the actual additional lending will be lower than the theoretical number.”

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