China offers attractive conditions to banks to get more money to cash-starved sectors

China banks

China’s central bank said on Tuesday that it will extend a preferential scheme for some banks that will free up additional funds for lending, as long as they channel money to weaker, cash-starved sectors of the economy.

But it also warned that some banks will no longer enjoy such preferential treatment after a recent review found they had failed to adhere to “standards” intended to channel loans more directly to rural areas and small companies.

The statement confirmed a Reuters report on Monday that the central bank is extending a programme that allows financial institutions that support rural finance and small enterprises to apply for a lower required level of cash reserves.

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The author Paul