LENDING & CREDIT | Staff Reporter, China

China's central bank urges banks to curb loan growth for rest of 2021: report

The surge in lending during the first two months of the year stoked bubble risks.

The People’s Bank of China (PBOC) has reportedly asked the nation’s major lenders to curtail loan growth for the rest, in order to curb bubble risks, reports Bloomberg based on accounts from people familiar with the matter.

This comes after a surge in lending during the first two months of 2021.

At a meeting with the central bank on March 22, banks were reportedly told to keep new advances in 2021 at roughly the same level as last year, the sources, who asked not to be identified, told Bloomberg.

Some foreign banks were also urged to rein in additional lending through a so-called "window guidance" recently after ramping up their balance sheets in 2020, one source said.

Publicly, the central bank had earlier stated that it asked representatives of 24 major banks operating in China to keep loan growth "stable and reasonable".

“On the one hand, there will be slowdown in loan growth, and on the other hand, the slowdown is quite moderate,” said Lu Ting, chief China economist at Nomura Holdings, adding that the pace is line with the PBOC’s stance of making no sharp policy turns.

Here’s more from Bloomberg.

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