China's central bank adjusts targeted RRR policies to support small firms

Headquarters of the People's Bank of China, the central bank, is pictured in Beijing, Aug 3, 2018. [Photo/VCG]

BEIJING - China's central bank decided Wednesday to ease evaluation rules for qualifying financial institutions to enjoy lower reserve requirement ratios (RRR) in a move to encourage inclusive financing.

Financial institutions can deposit less in the central bank as reserve money if they lend a certain share of their loans to small and micro firms each borrowing less than ten million yuan ($1.46 million) from them, the People's Bank of China said in a statement.

The evaluation threshold for inclusive financing is lifted from five million yuan, and the new policy takes effect immediately.

The move will help the preferentially targeted RRR cut cover more financial institutions, encouraging them to serve more small and micro firms which are usually in high demand of credit.

The State Council said late last December that China will improve its policies for targeted reserve requirement ratio cuts to encourage inclusive financing.