Lending market expanded, supervision tightened

The central bank will expand the number of institutions allowed to participate in the country's interbank lending market and tighten supervision in areas such as information disclosure.

Insurers, trust firms, financial asset and insurance asset managers, financial leasing companies and auto financing firms will be allowed to participate in the market for the first time when the new rules come into effect Aug. 8.

Their inclusion means all Chinese banks and most non-financial institutions will be able to lend and borrow money on the market, the People's Bank of China said in the new rules published on its Web site.

The rules will replace provisional regulations governing bank lending practices issued in 1990. Those rules had also been used by China's interbank lending market since its set-up in 1996.

"The interbank lending market has developed rapidly since its establishment 10 years ago, and its rates have become one of the benchmarks in China's interest rate system," the central bank said. "The new rules are aimed at further expanding the market."

The rules also give details on trading limits for members. For instance, banks can borrow money for a period of up to one year on the market while securities brokerages and trust companies can borrow money for up to seven days.