CBRC banned commercial banks to offer very high rates to attract deposits disguised as wealth management products.
China's banking watchdog has ordered lenders to stop trying to attract deposits by offering high-yielding wealth management products.
A draft of regulations made available for public opinion is aimed at cracking down on abuses in the marketing of wealth management products which bankers admit are being used to lure deposits amid tight liquidity conditions.
The regulations, which were published by the China Banking Regulatory Commission late Wednesday, explicitly state that banks are not allowed to attract deposits disguised as wealth management products, nor to bundle deposits and package them as wealth management products.
"Commercial banks are not allowed to violate government policy on deposits and offer very high rates to attract deposits," the regulations also stated, adding that these products aren't to be used to help banks meet regulatory requirements.
The People's Bank of China has raised the deposit reserve requirement 12 times since last year, leading to tightened interbank market conditions and a scramble for funding which has pushed money market rates to multi-year highs.
Chinese banks, typically smaller ones, are facing tighter and tighter liquidity conditions.
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