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Reserve ratio hike postponed in quake-hit areas

By Ding Qi (chinadaily.com.cn)
Updated: 2008-05-16 14:43

To support ongoing quake relief activities in Sichuan Province, the central bank has given financial institutions in six places approval to postpone a reserve ratio hike policy, the first time that has happened in China.

The six places are Chengdu, capital of the province, Mianyang, Deyang, Guangyuan, Ya'an, and the Aba autonomous prefecture.

In related moves, the Chengdu branch of the central bank decided yesterday to add up to 1.5 billion yuan ($214.29 million) in re-loans to boost agricultural cooperatives' credit input to the disaster area. It would also increase 500 million yuan in rediscount quotas for both Chengdu and Mianyang.

The bank also urged all branches in the quake-hit areas to report financial rediscount positions and re-loan needs quickly so as to unleash additional quotas.

The central bank announced on Monday it will raise financial institutions' reserve requirement ratios by 0.5 percentage points to steer credit growth and curb liquidity. The policy is set to take effect on May 20.

However, given the sudden mishap, postponing implementation of the policy in these areas will help the ongoing relief efforts there, a central bank official said.