China tells banks to curb lending: sources

BEIJING (Reuters) - China has ordered banks to limit their lending until the end of the year as part of efforts to keep investment under control and prevent the world's fourth-largest economy from overheating, sources said on Monday.

The authorities routinely clamp down on lending in the final quarter, but banking sources say Beijing has intensified its efforts this year.

Banking and official sources told Reuters that the central bank and banking regulator have been pressing lenders to keep growth in the volume of new loans for all of 2007 within an official 15 percent guideline, forcing some of them to curb lending sharply in the final months of the year.

However, the sources said the instructions, known as "window guidance", did not amount to a freeze on net new lending.

The Wall Street Journal on Monday cited banking and regulatory sources as saying that banks were being required to ensure that their outstanding loans at the end of the year did not exceed the level as of October 31.

An official at the China Banking Regulatory Commission (CBRC) denied that the agency had laid out such a specific target.

"No, no. We only require the banks to control lending reasonably," Lai Xiaomin, a spokesman for the CBRC, said of the newspaper's report. "We have not set fixed quotas for them."

A source at one major bank said the demand to rein in lending would not have much of an impact on its operations as it had not exceeded the guidelines set out at the start of the year.

"Such restrictions are mostly targeting smaller banks," a separate source said.