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Re-lending is a monetary tool used by the People’s Bank of China (PBOC), the country’s central bank, to increase financial institutions’ liquidity and guide credit flows.
The Chinese central bank would lend the 50 billion yuan to banks at discounted rates to allow them to re-lend the money.
They will require funds from the quota be credited to small and micro-businesses, as well as the agricultural sector, rural areas and farmers, the PBOC said in a statement on Friday.
The Central Bank said its re-lending exercise was aimed at lowering firms’ financing costs, and that it had pumped a record 99.4 billion yuan into the economy via “re-lending” in 2014.
52.4 billion yuan in the re-lending quota has gone to small businesses and 215.4 billion yuan to agriculture.
China’s central bank, at a January meeting, vowed to “continue with its prudent monetary policies in 2015 with better coordination of tight and loose monetary measures and proper fine-tuning.”
China is scheduled to release its fourth-quarter growth report on Jan 20 and economists are forecasting China’s economy likely expanded 7.2 per cent in the Oct-Dec quarter from a year earlier.
TBP and Agencies