PBoC Chief: Huge Credit Flow To Redundant Projects Poses Risk To Quality Lending

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Huge flow of credit to redundant projects and industries with excess capacity will pose risk to quality lending, Chinese central bank Governor Zhou Xiaochuan reportedly said. In an interview with a People's Bank of China publication, China Finance, Zhou said the central bank will guide the direction and lending pace this year.

A PBoC report released earlier in December showed that banks extended 9.21 trillion yuan of local currency loans during January to November 2009, up 5.06 trillion yuan from the prior year. In November, loans increased to 294.8 billion yuan.

Zhou noted that emphasizing only on a single monetary policy target seems insufficient in overcoming the financial crisis. Further, he said reserve requirement ratio is an important tool. Zhou reiterated that the central bank will maintain a moderately loose monetary policy.

Huge flow of credit to redundant projects and industries with excess capacity will pose risk to quality lending, Chinese central bank Governor Zhou Xiaochuan reportedly said. (Market News Provided by RTTNews)