Bank reserve ratio raised for fourth time

The central bank yesterday announced it will raise the reserve requirement ratio, or proportion of money banks must set aside in reserves, by half a percentage point.

The move, in a quick response to rising inflation in April, will push the ratio to 16.5 percent. It is the fourth such increase this year and will take effect from April 20.

The increase in ratio will absorb up to 200 billion yuan based on the current lending volume of banks and will affect small banks more seriously, said Zhao Xijun, finance professor of Renmin University of China.