China to strengthen oversight of banks' required reserves

Headquarters of the People's Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee

BEIJING (Reuters) - China’s central bank said on Thursday it will strengthen the oversight of the reserves that commercial banks and other lenders are required to deposit to ensure timely and full payment.

The People’s Bank of China will impose penalties on delayed payments of required reserves to the central bank, it said in a statement on its website.

The central bank said it would improve its checks on reserves to prevent payment arrears - or the daily average level falling short of the official requirement.

The change would help “ensure the unity of deposit reserve management system and promote healthy operations of financial institutions”, the central bank said

The central bank has cut reserve requirement ratios (RRR) - the level of deposits that banks must hold as reserves at the central bank - four times this year, to help support the slowing economy.

The reserve ratio is at 14.5 percent for large commercial lenders.

Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Jacqueline Wong, Robert Birsel