CHINA'S central bank has reportedly asked city-level commercial and rural lenders to deposit extra money with it - the first such move in two decades.
The move is clearly aimed to drain cash from an overheated market.
The People's Bank of China will pay the targeted lenders interest of 2.91 percent for three-month deposits and 3.44 percent for one-year deposits, the same rates for its bills of equivalent tenure, the Shanghai Securities News reported yesterday quoting reliable but unnamed sources.
City commercial banks are required to take up the special deposits next Tuesday, the amount of which, for now, may not exceed 100 billion yuan (US$13.30 billion), the report said.
Unlike the reserve requirement, which covers all banks, the special deposits are a short-term move aimed at limited players.
"The move is likely part of the central bank's measures to curb liquidity," said Zhang Qi, a Haitong Securities Co analyst.
The PBOC on October 13 raised reserve requirements for commercial lenders for the eighth time this year in a bid to curb loan growth.