Banks should not be encouraged to.......>

CHINA PRESS: Banks should not be encouraged to lower lending rates for small and

micro-sized enterprises below the benchmark interest rate according to Sina

Finance, citing Li Junfeng, director of the Financial Inclusion Department at

the China Banking and Insurance Regulatory Commission. Banks are recommended to

price their rates based on the principle of "guaranteeing the benefits" and

commercial sustainability, the newspaper said citing Li, who warned that lower

rates could lead to regulatory arbitrage. The breakeven interest rate should be

between 5% and 5.7% if the rate of non-performing loans is kept below 3%, Li

said.