The State Council has announced its approval of a draft amendment to China’s commercial banking law that would end the current loan-to-deposit ratio requirement preventing non-state banks from lending more than 75% of their deposits, South China Morning Post reported. Scrapping the longstanding requirement would help privately owned lenders and a nascent online banking sector to expand more aggressively using the freed-up capital, though to date commercial banks have remained wary of lending to small businesses most in need of credit. If the amendment is passed the China Banking Regulatory Commission would monitor the industry and could stop or suspend lending by specific banks should risk arise.
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