China Cuts Loan Prime Rate

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China has reduced a recently launched benchmark rate for the banking sector amidst concerns over borrowing costs and economic growth.

The National Interbank Funding Center announced on Wednesday 20 November that the one–year loan prime rate has been reduced to 4.15% from 4.2% the month previously, while the above-five-year LPR has been reduced to 4.8% from 4.85%.

The day previously Yi Gang (易纲), head of the Chinese central bank, called for “making effective use of the loan prime rate’s guiding function with regard to lending rates…and drive a decline in the rates for real loans.”

The loan prime rate (贷款市场报价利率) in China is the lend­ing rate pro­vided by com­mer­cial banks to their high­est qual­ity cus­tomers, and serves as the bench­mark for rates pro­vided for other loans.

At pre­sent the LPR re­port­ing group is com­prised of 18 com­mer­cial banks in China, in­clud­ing an orig­i­nal core group of 10 na­tional banks, plus two mu­nic­i­pal com­mer­cial banks, two rural vil­lage com­mer­cial banks, two for­eign in­vested banks and two pri­vately op­er­ated banks.

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