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China to Ease Bad-Loan Provision Rules to Support Growth

  • CBRC lowers coverage ratio to a minimum 120 percent: people
  • Move is expected to encourage more lending by Chinese banks
China Banking Regulatory Commission (CBRC) in Beijing, China.
China Banking Regulatory Commission (CBRC) in Beijing, China.

Photographer: Nelson Ching/Bloomberg

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China is relaxing rules governing how much banks must set aside to cover bad loans, people with knowledge of the matter said, a sign that regulators are comfortable the nation’s lenders are sound enough to extend additional credit and support the economy. 

The China Banking Regulatory Commission has issued a notice lowering the bad-loan coverage ratio to a minimum 120 percent from the previous 150 percent, the people said, asking not to be identified as the matter isn’t public.