(Adds details, bank regulator comments)
BEIJING, April 22 China's central bank will cut
the amount of deposits rural banks must hold as reserves by
between 0.5 and 2 percentage points, it said on Tuesday, the
latest in a series of measures to help combat a slowing economy.
The reserve requirement ratio (RRR) will be cut by 2
percentage points for rural commercial banks and by 0.5
percentage point for rural credit cooperatives, the People's
Bank of China said in a statement on its website www.pbc.gov.cn.
After the cuts the RRR for some rural banks will be as low
as 13 percent, the central bank said.
China's premier, Li Keqiang, had first announced the RRR
cuts last week, but had not given details. Li's announcement
came on the same day as official figures showed that China's
economy expanded at its slowest pace in 18 months between
January and March.
It also came just two weeks after China took its first step
this year to juice its slackening economy -- cutting taxes for
small firms and speeding up investment in railways.
"The cuts will help rural financial institutions increase
their financial strength and their ability to support rural
development," the central bank said in Tuesday's statement.
In a later separate statement it said that the cuts do not
mean a change in the direction of overall monetary policy, which
will remain prudent.
"The reserve requirement cut for some rural financial
institutions does not mean a shift in the direction of prudent
monetary policy and will not affect the total liquidity
conditions in the banking system," the central bank said.
Some analysts believe it is a matter of time before China
takes more forceful action to energise growth, such as relaxing
reserve requirements for major banks to free up more funds in
China's central bank sets different reserve requirements for
banks, depending in part on the size of their loan business.
The ratio stands at 20 percent for China's biggest banks,
which face the most onerous requirements, and fall to as low as
16 percent for smaller, rural banks.
Separately, China's cabinet said it also was looking to
boost rural banking with a series of new guidelines.
These include allowing more rural banks to take part in
re-lending to support rural small businesses, and launching a
pilot programme to securitise agricultural-related assets, the
statement on the government's website www.gov.cn said.
Banks will also be encouraged to issue financial bonds to
support rural development and to set up more branches in areas
that have strong agricultural sectors, it said.
The unveiling of new pro-growth measures in quick succession
suggests China may be more worried about the foundering economy
than it lets on, even though it has ruled out the use of major
stimulus to fight short-term dips in growth.
(China Economics Team; Editing by Simon Cameron-Moore)