Multiple Banks Respond to Consumer Loan Interest Rate Cuts; Can Regions "Copy" the Policy?

Recently, multiple banks, including major commercial banks and joint-stock banks, have responded to the government's call to optimize consumer loan interest rates. The banks have stated that they will streamline their procedures, simplify their processes, and ensure that the benefits of the policy are timely and effective for consumers.

Although the specific implementation details have not been disclosed, reporters noticed that some regions, such as Sichuan, Chongqing, and Hangzhou, have already implemented similar consumer loan interest rate policies. From a practical perspective, each region has its own differences, and the standard rates are typically around 1.5%.

Multiple Banks Respond to Consumer Loan Interest Rate Cuts

On July 31st, the State Council held a meeting to deploy policies for personal consumer loans and service industry loan interest rates. The meeting emphasized that by implementing interest rate cuts on personal consumer loans and service industry loans, the government can reduce residents' credit costs and service industry financing costs, thereby stimulating consumption potential and market vitality.

Since August, major commercial banks and some joint-stock banks have responded to the policy call. The Industrial and Commercial Bank of China stated that it is actively pushing forward with the implementation of personal consumer loan and service industry loan interest rate policies, strictly following legal regulations and market principles, optimizing procedures, and simplifying processes to ensure timely and effective implementation.

The Agricultural Bank of China stated that it will actively deploy policy preparation work to ensure that the interest rate policy is accurately and efficiently transmitted to all types of businesses, assisting in reducing residents' credit costs and service industry financing costs.

The Construction Bank stated that it has launched a consumer finance special action plan, proposing six major actions and 35 specific measures. The bank will establish a comprehensive brand for personal loans called "Construction Credit" and increase support for key consumption fields such as old-for-new products, automobiles, home appliances, tourism, health, and catering.

The Postal Savings Bank stated that it will leverage its extensive network of branches to reduce rural residents' credit costs and ensure that the benefits of the policy are timely and efficient for all consumers.

The China Securities and Insurance Regulatory Commission has analyzed that if the government implements a financial interest rate cut on consumer loans, it can achieve the policy goal of reducing real interest rates, weakening savings incentives, and increasing current consumption. Moreover, this will also benefit banks' basic conditions.

A research team at Northeast Securities believes that by implementing an interest rate cut on consumer loans, banks can increase their lending scale while maintaining a low risk of non-performing assets. The increased income can be used to handle outstanding retail non-performing loan debts.

Some Regions Have Already Implemented Examples

The specific implementation details of the interest rate policy have not been disclosed, but reporters noticed that some regions have already implemented similar consumer loan interest rate policies. For example, Sichuan Province has launched a comprehensive consumer loan interest rate cut policy since 2023, covering all provinces and cities.

Sichuan Provincial Finance Department has implemented a consumer credit interest rate cut policy, providing residents with a one-time interest rate reduction of up to 1.5% for loans with repayment periods of one year or more, targeting four categories of products: automobiles, electronics, housing renovation, and home appliances.

The process of executing the policy involves borrowers submitting application materials to banks, which then review the applications and submit them to the local finance department for approval. Once approved, the finance department will allocate funds to the bank, which will then disburse the loans to eligible borrowers.

According to Sichuan Provincial Finance Department's official website, as of April 8th, the province has already disbursed over 5.8 billion yuan in interest rate reduction funds, supporting local banks' issuance of consumer loans totaling 41.1 billion yuan.

Each region's implementation process is different, with some focusing on specific product categories or targeting specific groups of people.

"This policy will stimulate consumption potential and market vitality through a 'pull' effect. By implementing interest rate cuts on personal consumer loans and service industry loans, the government can reduce residents' credit costs and service industry financing costs, thereby increasing consumption willingness and ability."