China says has not cut bank reserve requirements

BEIJING Nov 24 (Reuters) - China's recent move to revise reserve requirements for several rural banks does not amount to a cut in their reserve requirement ratio, the central bank was quoted as saying on Thursday.

Sources told Reuters earlier this week that the central bank had cut the reserve requirement ratio for five banks in the eastern province of Zhejiang, a centre for private enterprise, by 50 basis points to 16 percent to support the rural economy.

But the Financial News, published by the People's Bank of China, quoted the central bank's Zhejiang branch as saying that the fall in the reserve requirement ratio for six rural banks to 16 percent had kicked in automatically after a one-year policy plan expired this month.

Some investors had speculated that the adjustment was part of a government campaign to relax monetary policy in some quarters of the economy. The talk gained traction after a manufacturing survey showed output at a 32-month low in November.

The newspaper said the central bank reviewed the third-quarter loan books of rural banks every November, and banks that did not lend freely to farms were punished with a 50-basis-point rise in reserve requirements.

The six banks in question were penalised a year ago and the penalty lapsed in November, the newspaper reported.

"The revision of the reserve requirement ratio of these banks to a normal level should not be interpreted as a cut in their reserve requirements," the paper said. (Reporting by Koh Gui Qing; Editing by Chris Lewis)