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PBOC To Re-Price Loans 

Policy part of interest rate reform
By Archie Zhang
     BEIJING (MNI) - The People's Bank of China (PBOC) has announced rules for
banks to re-price existing loans by using the new market-oriented reference
rate.
     The move aims to "deepen the reform of interest rate and further promote
the use of Loan Prime Rate", the PBOC said in a statement published on its
Website on Saturday.
     The reference rate - the Loan Prime Rate (LPR) - has been linked to open
market operations of the central bank since August this year to reflect market
dynamics and steer corporate borrowing costs lower.
     For home loans, the margin over the reference rate should be the spreads
between 4.8%, 5-year LPR published by PBOC in December, and the recent interest
rate adopted by loans. For other loans, debtors and banks are allowed to
re-negotiate the margins with other terms.
     The central bank said the re-pricing process should be finished before
September of 2020. Currently, 90% of new loans have adopted the new LPR, the
PBOC said.
--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com
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