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China to cut lending

By Staff Reporter
21 January 2010 | 1 minute read

Chinese banks are being advised by banking authorities to tighten their lending activities and in some cases stop lending, to prevent a liquidity crisis.

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Chinese banks expended a record 9.6 trillion yuan ($1.5 trillion) in new loans last year.

Citic Bank and Everbright Bank are among the banks being asked by Chinese authorities to lift their reserve requirement ratio by half a percentage point, ABC News reported today.

According to a source close to the People's Bank of China, some banks are being asked to remove their reserve more than other banks.

"Basically the central bank is saying, 'If you keep lending like this, I'll be tough with you,'" the source told ABC News.

Senior officers with China Merchants Bank and the Agricultural Bank of China have reportedly told Reuters that their banks would stop approval of new loans until the end of January.

China’s central bank declined to comment on the reports.

China to cut lending
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