Chinese banks should ensure that the normal demand for loans is satisfied this month, the banking regulator said on Thursday, signaling that the government wants to avoid an over-tightening of credit.

In a statement, the China Banking Regulatory Commission said it was responding to media reports that it was strictly controlling the issuance of loans in December after banks nearly exhausted their full-year lending target.

The commission has recently urged banks to strengthen management of credit risks, while ensuring that the normal demand for loans by individuals and enterprises can be satisfied, the CBRC said in a text message sent to reporters.

Bank loans were especially important for on-going projects to ensure that they have an uninterrupted cash flow, it said.

The commission added that it had already achieved results in controlling the pace of lending this year.

Chinese banks had nearly hit the government's full-year lending target of 7.5 trillion yuan by the end of November, prompting questions about whether the regulator would try to slow their issuance of loans in the final month of the year.

Control of credit issuance is one of the most important monetary policy tools in China and many in the market had thought that Beijing might crack down harder on lending as a way of tamping down on inflationary pressures.

Chinese consumer price inflation rose 5.1 percent in the year to November, a 28-month high, and the government has vowed to give greater prominence to the stabilization of prices in its policy efforts.

(Reporting by Aileen Wang and Simon Rabinovitch; Editing by Ken Wills)

China