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China Moves to Scrap Rule Limiting Bank Loans to 75% of Deposits

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China Proposes End of 75% Loan-to Deposit Ratio Cap

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China’s cabinet moved to scrap a rule that caps lending by commercial banks at 75 percent of their deposits, a measure that will help boost credit expansion as the nation looks to revive economic growth.

The State Council will propose amending the nation’s banking law to make the limit a ratio used for reference rather than a regulatory statute, according to a statement posted to its website Wednesday. A system will be set up to monitor the liquidity of banks based on the ratio, it added. Changes to the law need to be approved by the Standing Committee of the National People’s Congress.