China cuts bank reserve ratio requirement

[BEIJING] China's central bank announced on Sunday it would cut the level of funds that commercial banks must hold in reserve by one percentage point, the second such move this year to boost lending.

The move, effective Monday, comes days after the world's second largest economy reported its worst quarterly growth figure for six years.

In a statement on its website, the People's Bank of China (PBoC) said it will give an additional one-percentage-point RRR cut to banks for agricultural services and a further two-percentage-point cut to the Agricultural Development Bank of China.

It will also give a 0.5 percent cut to certain banks that give agricultural or small-business loans.

The cuts will "further enhance the ability of financial institutions to support restructuring," the PBoC said.

The reduction in the reserve requirement ratio (RRR) - the amount of cash banks must keep on hand - follows a similar move in early February, which was the first across-the-board cut since May 2012.

China's gross domestic product (GDP) growth slowed to 7.0 per cent in the first quarter from 7.3 per cent in the final three months of last year, marking the worst result in six years.

AFP