China has ordered banks to include their margin deposits in required reserves to mop up excessive liquidity, banking sources said, the latest move in Beijing's campaign to rein in inflation.
Commercial banks will have to include margin deposits paid by their clients to secure the issuance of banker's acceptance, letters of guarantee and letters of credit in their required reserves.
Such deposits amounted to 4.4 trillion yuan ($688.6 billion) at the end of July, according to central bank data.
It was not immediately clear by how much additional money banks would have to set aside as reserves, but the actual amount would vary from bank to bank.
China's central bank has raised bank reserve requirement ratios nine times since November, taking the ratio to a record 21.5 per cent for the country's biggest banks.
Some banks have received the order notice from the People's Bank of China, which requires them to pay deposits to the central bank in batches, starting from early next month, the sources said.
The central bank was not immediately available for comment.
Source : New Age
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