China's central bank on Tuesday announced that it had lent 245.5 billion yuan ($36 billion) to 22 financial institutions through medium-term lending facility (MLF) to keep liquidity basically stable.
The MLF operation includes 138.5 billion yuan that will mature in six months and 107 billion yuan that will mature in one year, Xinhua news agency quoted a spokesman of the People's Bank of China (PBOC) as saying.
The interest rates stood at 2.95 per cent for the six-month MLFs and 3.1 per cent for the one-year MLFs, both were 10 basis points (bp) higher than previous MLF issues.
"This is the first time that the central bank has increased the MLF interest rates," said Wen Bin, a researcher at China Minsheng Bank, aiming to control credit growth and financial leverage.
The move will ease seasonal liquidity tension in the financial system ahead of Chinese Lunar New Year, which falls on January 28 this year, Wen added.
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The MLF tool was first introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank by using securities as collateral.
The central bank recently provided provisional liquidity support to several big commercial banks to meet rising cash demand.
--IANS
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