China cuts bank reserve requirement

By IANS,

Beijing : China’s central bank has lowered the reserve requirement ratio (RRR) of banks by 50 basis points to ease a short-term credit crunch.

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The cut, the second in three months, will drop the RRR to 20.5 percent for large banks and 17 percent for mid- and small-sized banks, the People’s Bank of China (PBOC) said in a statement Saturday.

The move will become effective Feb 24 and release an estimated 400 billion yuan ($63.54 billion) into the market.

The bank in December cut the RRR by 50 basis points for the first time since December 2008, after hiking the RRR six times last year in an effort to check inflation, the People’s Daily reported Sunday.