PBOC Reaffirms Stand on Unauthorised Interest RatesThe People's Bank of China (PBOC) recently issued a notice reminding banks of a ban on unauthorised higher interest rate offers to attract more deposits.Over the past years, the central bank has adopted a series of measures to stop unfair competition, and penalised a number of financial institutions which have violated the state policy on interest rates. However, the trend seems to have continued unabated as some of these financial firms have extended massive loans to enterprises which have then deposited the funds into banks. The notice required all financial institutions and postal saving offices to strictly follow the savings interest rates set by the PBOC. No one is authorised to raise interest rates, or raise the rates in disguised forms such as service fees, rewards and material gifts to depositors. Financial institutions were urged to eliminate their practice of linking the amount of deposit savings with the salary, bonus and promotion of individual staff members. Regarding the granting of loans, institutions are not permitted to convert loans into savings. The PBOC asked enterprises and residents to be observant and report any illegal operations. |
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