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China removes commercial banks' loan-to-deposit ratio

[BEIJING] China's cabinet said late on Wednesday it had passed a draft amendment to the country's commercial banking law, removing a longstanding loan-to-deposit ratio requirement, in order to boost bank lending amid slowing economic growth.

Chinese banks cannot lend more than 75 per cent of their deposits under the current law, limiting their ability to make loans.

The change will "strengthen financial institutions' ability to lend more to the agriculture sector and small businesses," the State Council said in an online statement.

The draft admendment will be submitted for approval to the Standing Committee of the National People's Congress, China's parliament.

The State Council also said it would set up a 300 billion yuan (S$65 billion) national insurance fund to invest in domestic and foreign funds that finance urban construction, regeneration and water projects as well as key projects in the "One Belt, One Road" initiative.