China has shelved plans to tailor reserve requirements to individual banks as a way of keeping a tight leash on heavy lenders, local media reported on Monday.

The central bank late last year said it would implement dynamic differentiated required reserve ratios, but the cabinet has ruled that the system is too unwieldy for now, New Century Weekly magazine reported on its website.

Commercial bankers contacted by Reuters were unable to confirm the report, but said that the central bank's idea had appeared to run aground because of its complexity.

There are too many variables, and it is too difficult and too subjective to implement. This was not in line with the original intention of establishing a concise and scientific formula, the Chinese-language magazine cited an unnamed source close to the central bank as saying.

Although the People's Bank of China never detailed how the system was to work, it was believed that it would review lender balance sheets on a monthly basis and adjust the amount of money they must put on reserve.

The magazine reported that the central bank had distributed instructions to banks last December, ordering them to calculate their own reserve ratios based on multiple indicators, including capital adequacy ratio, liquidity status, leverage ratio, provisions, credit ratings and more.

The central bank's formula was complicated beyond belief. Fundamentally, it wasn't clear enough, but it wanted to establish a quantitative control. The State Council did not understand it and so rejected it, banker at China Development Bank told Reuters, speaking on the condition of anonymity.

Despite abandoning its plans, the central bank would still look at loan issuance by individual banks and could impose additional selective reserve requirements on those that have been especially profligate, the report added.

The dynamic reserves had been intended to replace the annual loan quotas that the central bank has assigned to lenders in the past, with these targets seen as too crude for an increasingly sophisticated Chinese financial system.

China on Friday raised all banks' reserve requirements for the second time this year, an indication that, alongside orders to restrain lending, it has implemented monetary policy tightening with broad brush strokes, rather than with the fine quill that the dynamic differentiated system would have required.

New lending by Chinese banks fell below market forecasts in January after Beijing stepped up restrictions on credit issuance, but analysts said the figure was still strong and more tightening was likely with inflation running near its fastest in more than two years.