The China Banking Regulatory Commission is considering reducing risk weightings for loans to companies and small-business owners and delaying tougher capital-adequacy ratios for banks, sources said. "Apparently the regulator is concerned about slower growth and now becomes reluctant to constrain banks' lending capacity by too much," said Sheng Nan, an analyst at CCB International Securities. "This will reduce capital needs for banks and give them more incentive to boost loans to cash-strapped smaller firms."

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