PEKING (dpa-AFX) - China on Wednesday said it would introduce new bank capital rules only at the start of next year, as the slowing economy gave policymakers less room for measures that may cut back lending.
The government had earlier planned to impose the rules from January this year, but had reportedly postponed it to July. However, concerns that such a move could hurt lending has prompted authorities to delay it by one year.
China's recent policy moves were mainly aimed at boosting bank lending, which could in turn help the economy to sustain growth momentum. The economy grew at an annual rate of 8.1 percent in the first quarter of the year, the slowest pace in almost three years.
High uncertainty prevailing in the global economy, largely due to the intensifying turmoil in euro area, and a weakening exports have been weighing on China's economic growth. Premier Wen Jiabao has pledged to continue policy fine-tuning and shift the government's focus to a more consumption-led growth.
The new rules, which are in accordance with the Basel III agreements, require banks to hold more capital as buffer to deal with losses on their loans.
The government will allow 'a reasonable transition period' for banks to meet the new capital adequacy standards, to help 'maintain appropriate credit growth,' the Cabinet said in a statement.
According to the statement, the regulator will allow lenders to include 'excess' loan-loss provisions as capital. Banks will have a grace period of 10 years to phase out issued capital instruments that are not qualified under the new rules.
The new rules require a capital adequacy ratio of 11.5 percent for major banks and 10.5 percent for non-systemically important banks, according to China Banking Regulatory Commission's draft rules.
Copyright RTT News/dpa-AFX