The Chinese government told the six largest state-owned banks to increase their reserves to 17.5% of deposits from 17%, The Associated Press reported.
State-owned banks were previously told to step up lending in a bid to stimulate the economy. The economy grew at an annual rate of 10. 3% in the second quarter, and policy makers have grown concerned about easy credit fuelling inflation and a real estate bubble.
The reserve hike is "a clear signal to commercial banks that the central bank is willing to take actions to control lending" Goldman Sachs economists wrote in a report.
The increase in reserve requirements would take about 200 billion yuan ($29.55 billion) out of lending pool, the economists said.
The banks in question are Industrial & Commercial Bank of China Ltd, Bank of China Ltd, China Construction Bank Ltd and Agricultural Bank of China Ltd, China Merchants Bank Ltd and China Minsheng Bank Ltd.