New loans by financial institutions in Shanghai reached a record high in the first three months as corporate capital demands and banks’ lending intent remained strong, the central bank’s Shanghai headquarters said yesterday.

The increase between January and March, which accounted for nearly half of total new loans made last year in the city, reflected a strong lending nationwide. That prompted the central bank to raise last week the reserve requirement ratio for banks for the third time this year.

"The financial institutions should properly understand the central government’s macro-control intent," the People’s Bank of China‘s Shanghai branch said yesterday. It urged banks to maintain a steady growth in lending to remain a moderate level of liquidity.

According to the official figures, the new loans made in both domestic and foreign currencies in Shanghai reached 87.23 billion yuan in the first quarter, a year-on-year jump of 40.87 billion yuan.

It pushed the outstanding loans at Shanghai financial institutions to 1.947 trillion yuan at the end of March, a year-on-year increase of 13.2 percent.

Domestic banks accounted for lion’s share of the new lending, which rose 40.35 billion yuan over the previous year to 73 billion yuan. Small and medium-sized commercial banks lend more than ever, the regulator said yesterday.

In the first quarter, small lenders in the city registered total new renminbi lending of 47.76 billion yuan, up 36.27 billion yuan year-on-year. They accounted for 56 percent of total new loans made in the city, up 15 percent over the beginning of 2007 and 20.5 percent than a year earlier.

Via China Daily