Laws of the People's Republic of China

Circular of the People's Bank of China concerning the Adjustment of the RMB Loan Interest Rates of Financial Institutions

Yin Fa [2006] No. 134

Shanghai Headquarters, all branches and business management departments of the People's Bank of China, all central sub-branches in all provincial cities (capitals) and the Central Sub-branch in Shenzhen Municipality of the People's Bank of China, all policy banks, state-owned commercial banks, joint stock commercial banks, and the China Postal Savings and Remittance Bureau,

The People's Bank of China decides to increase the benchmark interest rates for the loans granted by financial institutions as of April 28, 2006. The relevant matters are hereby notified to you as follows,

I.

The interest rates for the loans granted by financial institutions shall be increased, among which the one-year loan interest rate shall be increased by 0.27 %, from the present 5.58% to 5.85%. The loan interest rates for other loans shall also be adjusted accordingly (For the details, please see Attachment 1). The floating methods for the loan interest rates shall remain unchanged.

II.

The interest rates for the loans of the individuals' house accumulation funds shall be increased properly (For the details, please see Attachment 1).

III.

The interest rates for the saving deposits in financial institutions shall remain unchanged. And the interest rates for the loans granted by the People's Bank of China to the financial institutions, the deposit reserve interest rates and the excessive reserve deposit interest rates of financial institutions shall also remain unchanged.

IV.

The interest rates for the preferential loans (For the details, please see Attachment 2) increases correspondingly. The criterions on the subsidies for the interest differences of preferential loans and the subsidizing methods shall remain unchanged.

Shanghai Headquarter and all branches (business management departments) of the People's Bank of China, the central sub-branches of the People's Bank of China in all provincial cities (capitals), and the Central Sub-branch in Shenzhen Municipality of the People's Bank shall timely forward this Circular to the urban (rural) commercial banks, urban and rural credit cooperatives, foreign-funded banks conducting RMB loan business, and other financial institutions within their respective jurisdictions, and urge them to timely execute it. Meanwhile, they shall investigate into and research the responses and problems posed by all sides after the adjustment of the interest rates, and report them to the Monetary Policy Department of the Headquarter of People's Bank of China in a timely manner.

(Fax: 010-66012765)

Attachments:

1.

Form of Adjustments of the Loan Interest Rates of Financial Institutions

2.

Form of Adjustments of the Interest Rates for Preferential Loans

The People's Bank of China

April 27, 2006