Chinese yuan _ renminbi _ currency
Yuan banknotes REUTERS/Petar Kujundzic

The People’s Bank of China, China's central bank, announced on Friday that it has removed its previous minimum floor on the interest rates banks must charge clients for loans, Reuters reported.

The floor had been set at 70 percent of the benchmark lending rates set by the central bank, Channel NewsAsia said.

The move will “support the real economy and improve economic restructuring and upgrading,” the bank said in a statement.

It will allow banks to set lending rates by themselves. The bank also said the move reduces the financing costs for domestic companies and improves the allocation of capital.

The bank also announced it would scrap controls over bill discount rates, though it wouldn’t act to lift a cap on deposit rates.

In financial statistics released Thursday, the central bank said outstanding loans in renminbi and foreign currency were at 72.87 trillion yuan ($11.87 trillion) at the end of June, up 15 percent from last year.

The new rules go into effect Saturday.