PBoC will relax loan-to-deposit ratio to bolster banks' lending power, sources say

People’s Bank of China officials told representatives from banks and financial firms that the central bank would let them include deposits from non-bank financial institutions–such as asset managers and securities firms–when calculating their total deposit bases, The Wall Street Journal reported, citing unnamed sources. Mainland banks still cannot lend more than 75% of total deposits, but the new move effectively broadening the basket of assets eligible for inclusion that category is roughly equivalent to injecting RMB1.5 trillion (US$242 billion) into China’s banking system, according to analysts’ estimates. The latest measures are significant but stop short of the country’s 2008 stimulus, in which the central government spent US$586 billion to lessen the impact of the global financial crisis.