China's PBOC cuts stock buyback relending rate to 1%

The People's Bank of China (PBOC) announced that, effective immediately, the interest rate on loans for stock buybacks and increases will be cut by 0.25 percentage points to 1%. The move is intended to strengthen the implementation of the policy and support the healthy and stable development of the capital market.

Policy Details and Implementation

The Stock Buyback and Shareholding Increase Relending facility is available to 21 national banks and 5 systemically important city commercial banks. According to the PBOC, the policy includes:

• Support Ratio: 100%
• Term: One year, which can be extended according to the needs of the banks.
• Pricing: Banks may appropriately add a spread to the refinancing interest rate basis to determine the term and interest rate of loans.

This facility was originally created by the PBOC and relevant departments in October 2024. In December 2024, the maximum term for these loans was extended from one year to three years, and the requirement for listed companies' own funds for buybacks was reduced from 30% to 10%. In January 2026, the PBOC previously cut the interest rate for this tool to 1.25%.

Market Demand and Regulatory Support

Following a symposium held on November 2 by the PBOC, the National Financial Regulatory Administration (NFRA), and the China Securities Regulatory Commission (CSRC), the PBOC revealed that banks have submitted loan amount applications for stock buybacks and increases exceeding 200 billion yuan (approximately $30.0 billion).

Regulators also called for broader participation and lower fees for a swap facility serving securities firms, fund companies, and insurers. The PBOC, NFRA, and CSRC are shifting the program for stock repurchases and share purchases from a temporary arrangement to a long-term institutional policy.

Expert and Official Perspectives

Dong Ximiao, chief economist of Zhao Lian, stated that the reduction to 1% has "improved the macro signal of fund prices, allowing low-cost funds to flow more smoothly to enterprises with real buyback needs."

Ru Lixian, vice president of Linuo Group, noted that the group's business financing cost for obtaining special loans is controlled around 2%, which is "significantly lower than general working capital loans of the same term."

Regarding future financial work, PBOC Governor Pan Gongsheng said on November 3 in Beijing that he will "continue to implement a moderately loose monetary policy; implement monetary policy tools to support the capital market, consolidate and improve the capital market stability mechanism; and maintain the stable operation of financial markets such as stocks, bonds, and foreign exchange."

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Sources

• chinanews.com.cn (in Chinese): China's central bank cuts interest rate on stock buyback and increase loans to 1% - China News Service
• finance.biggo.com: China's PBOC cuts relending rate for stock buyback, shareholding increase loans to 1%; bank quota applications exceed 200 billion yuan — BigGo Finance
• newsquawk.com: PBoC lowers the re-lending rate for stock buyback and shareholding loans to 1% (prev. 1.25%) | Newsquawk
• tokenpost.com: China Makes Stock Buyback Lending Program a Long-Term Policy, Cuts Program Relending Rate to 1% | TokenPost

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.