China has injected additional capital into the banking system in a bid to support and stabilise the economy, Bloomberg has reported.
People’s Bank of China, the central bank of the country, has awarded CNY300bn ($43bn) to the banks through the medium-term lending facility.
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Of the amount, CNY286bn will be used to roll over loans due next week. The central bank offered loans at 3.25%.
The move is part of wider efforts by the government to support growth and stabilise the economy.
Last month, China added $29bn in the banking system. This was followed by another $16bn earlier this month.
In another development, several Chinese rural banks, facing capital crunch, sought regulatory assistance to bolster their balance sheets.
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By GlobalDataThe move was reported by South China Morning Post citing filings posted with the securities regulator.
According to the report, 29 rural banks this year have applied to the China Securities Regulatory Commission (CSRC) to raise capital by selling new shares.
Of these 29 lenders, ten banks had a non-performing loan ratio of more than 5%.
Furthermore, around 15 of the 29 lenders witnessed a steep increase in their non-performing loan ratio between 2007 and 2018.
Dull economic growth and ongoing trade war with the US were said to have a detrimental impact on the health of these lenders.
Recently, small banks in China have been subjected to increasing challenges.
In May this year, Chinese regulators took over Inner Mongolia-based Baoshang Bank due to growing credit risks. This was followed by partial rescue of Jinzhou Bank and Hengfeng Bank, reported the publication.
