August 29, 2014 / 10:17 AM / 3 years ago

UPDATE 1-China cuts reserve requirement for banks in quake-hit zone

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BEIJING, Aug 29 (Reuters) - China's central bank said on Friday it would cut reserve requirement ratios by 1 percentage point for banks operating in areas hit by a recent earthquake in the southwestern Yunnan province.

The central bank did not say how many banks will benefit from the cut. Currently, big banks must hold 20 percent of their deposit as reserve, while the ratio for some rural banks is as low as 13 percent.

China has cut reserve ratios for selected banks this year under the government's "targeted" policy stimulus to support the economy.

The central bank will also cut interest rates on farm-related re-lending in the quake-hit zone by 1 percentage point, it added.

Qualified financial institutions will be allowed to issue bonds to replenish their capital and companies will be allowed to issue bonds to support the disaster relief efforts, it said.

Banks will be allowed to cut mortgage rates and the down payment ratio for home buyers, the central bank said.

The earthquake earlier this month struck a remote part of Yunnan - the latest incident in a temblor-prone region. The epicentre of the quake was Longtoushan town in the province's mountainous Ludian county. (Reporting by China economics team; Editing by Anand Basu)

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