×

China's central bank bans new issuance of long-term NCDs

BEIJING, Aug 31 (Reuters) - China's central bank said on Thursday financial institutions are not allowed to issue inter-bank negotiable certificates of deposit (NCD) with a tenor exceeding one year from Sept. 1.

NCDs with a tenor of one year or less can still be issued, the People's Bank of China said.

Issuance of NCDs has risen quickly over the last year, with smaller lenders aggressively raising money via the instruments, and then using the proceeds to make higher-yield, risky investments.

The PBOC said earlier this month it would start to include NCDs, tenors within one-year, issued by banks with assets of more than 500 billion yuan ($75.11 billion) from the first quarter of 2018. (Reporting by Beijing Monitoring Desk; Editing by Jacqueline Wong)