BEIJING, July 19 (Reuters) - China's central bank announced long-awaited interest rate reforms on Friday, removing controls on rates that banks may charge clients for loans, in a step towards more market-driven pricing of credit.
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Following is a timeline of China's main interest rate reforms and benchmark rate changes:
Nov 1986 - China allows banks to borrow and lend short-term money to each other for the first time.
Jan 1996 - China sets up an interbank lending market in Shanghai, giving birth to China Interbank Offered Rates (CHIBOR). In June, it lifts all restrictions on CHIBOR and lets the market decide the rates.
June 1997 - China sets up an interbank bond market, allowing financial institutions to trade debt in a spot market and via repurchase agreements, with rates being decided by the market.
Oct 1999 - China allows domestic insurance companies to bargain with banks for rates on large deposits above 30 million yuan ($3.7 million) and of more than five years' duration. Pension funds are granted the same right in 2002.
Sept 2000 - China frees interest rates on dollar deposits of $3 million and above. The floor on rates for smaller dollar deposits is lifted in November 2003; the ceiling on dollar savings longer than 12 months is scrapped in November 2004.
Oct 29, 2004 - The central bank raises bank interest rates for the first time in nine years. The benchmark one-year yuan lending rate goes up to 5.58 percent from 5.31 percent, and the one-year deposit rate rises to 2.25 percent from 1.98 percent. It also lets banks charge borrowers what they like above the benchmark but banks can offer rates on loans at little as 90 percent of that benchmark. It also gives banks some leeway to cut deposit rates.
Feb. 9, 2006 - The central bank permits interest rate swaps.
Oct-Dec 2008 - The central bank makes a series of rate cuts to steer the economy through the global crisis. The benchmark lending rate drops to 5.31 pct by December 2008.
June 7, 2012 - The PBOC cuts interest rates for the first time since 2008, after a series of rises in the in-between years that had taken the benchmark rate to 6.56 pct by July 2011.
It gives banks the freedom to set deposit rates as high as 110 percent of the benchmark and to offer rates on new loans for as little as 80 percent of official policy rates - an additional 10 percentage points from the previous floor.
July 5, 2012 - The benchmark interest rate is cut again to 6 percent, where it still remains. The central bank also lowers the floor for lending rates to 70 percent of benchmark rates from 80 percent previously. But it keeps the ceiling on deposit rates unchanged. The one-year deposit rate stands at 3 percent.
July 19, 2013 - The PBOC scraps the floor on bank lending rates and frees up bank discount rates. It does not change the ceiling on bank deposit rates.
(Reporting by Kevin Yao; Editing by Neil Fullick) Keywords: CHINA ECONOMY/RATES
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