China has told its ‘big four’ state-owned banks to reduce the ceiling on interest rates they pay on some deposits, three sources with knowledge of the matter said.
The guidance comes as banks face squeezed margins under the weight of huge inflows of savings and deposits amid rising economic risks, while credit demand remained subdued.
The interest rate self-disciplinary mechanism, a top regulatory body overseen by the People’s Bank of China, urged lenders to lower ceilings on some personal and corporate deposits by 30 basis points (bps), effective on May 15, the sources said.
The regulatory body could not immediately be reached for comment after working hours.
China’s central bank does not set bank rates directly but guides them through the market-based mechanism, which comprises banks big and small.
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