The RRR was reduced by 1 per cent for rural financial institutions, 2 and 3 per cent for loans to agriculture and small enterprises, because of a slowing economy. Banks can now boost lending by about 1.2 trillion yuan.

Beijing (AsiaNews) – In a bid to help the rural economy and small businesses, the People’s Bank of China (PBoC) cut the reserve requirement ratio (RRR), i.e. the amount of cash reserves lenders must hold at the central bank.

On Monday, the ratio was reduced by a percentage point, to 18.5 per cent, following the release of a report that showed the slowest economic growth in six years.

This is the second time this year that China’s central bank lowered the RRR.

Gross domestic product grew 7.0 per cent in the first quarter, slowing from 7.3 per cent in the fourth quarter of 2014, the National Bureau of the Statistics said last week.

Imports and exports plunged and growth in industrial output and retail sales slowed in March.

The cut will allow banks is expected to boost lending by about 1.2 trillion yuan (US$ 194 billion).

The RRR will be reduced by another percentage point for rural financial institutions, two additional percentage points for the Agricultural Development Bank and a further 0.5 percentage point for banks with a certain level of loans to agriculture and small enterprises.

The latest reduction follows a similar move in early February, which was the first across-the-board cut since May 2012.

The PBoC has also cut interest rates three times in past six months.

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• rrr
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