SHANGHAI, CHINA – Smaller banks in the Chinese city of Shanghai are doing all its best to keep up with competition and further attract depositors.

This time, the banks are offering higher deposit interest rates in order to attract more depositors and further compete with major banks in the city.

Shanghai Daily reported that city commercial and joint-stock banks have raised their one-year deposit rate above 2.75 percent after the People’s Bank of China cut the benchmark rate to 2.05 percent effective from yesterday.

The Bank of Nanjing offers the highest interest rates of 3.15%.
The Bank of Nanjing offers the highest interest rates of 3.15%.

The report showed that among the 27 domestic and foreign banks in Shanghai, the Bank of Nanjing offers the highest interest rates of 3.15%.

The Postal Savings Bank of China and the five largest state-owned banks are offering no higher than 2.55%, the report added.

Last Sunday, the PBOC cut the rate by 25 basis points, the third time since November 2014.

That means the one-year deposit rate will now be 2.25 percent and the one-year lending rate will be at 5.1 percent.

The central bank said the decision to cut interest rate was in line with expectations that China will implement pro-growth monetary measures based on the latest economic figures, which showed China is facing a rocky ride on its reform drive.

Ma Jun, the research bureau chief economist of the central bank, however, clarified that the rate cut announced by the central bank last Sunday was not a Chinese version of the quantitative easing (QE) adopted in some developed countries.

Ma told the Xinhua news agency that the QE adopted in other economies were implemented because their policy rate reached almost zero and their economies were facing recession.

China’s decision to trim the benchmark loan and deposit interest rates starting 11 May should not be interpreted as QE because China’s economy is not in recession and the country’s policy rates are not close to zero. –