The China Banking Regulatory Commission has confirmed that it will grant foreign banks incorporated in China a grace period of five years to meet the loan-to-deposit ratio requirement.

Foreign institutions will need to observe the 75 pct ceiling by Dec 31, 2011, the CBRC said in a notice posted on its website.

The CBRC also said foreign banks incorporated locally will be given until the end of 2009 to observe a lending cap of 10 pct of capital to any single borrower. Before the end of 2009, the cap will be 25 pct of capital, it said.

Such banks must be in compliance with all other regulations by Aug 1, 2007, the commission said.

The regulator said approvals for local incorporation to offer yuan services could be given in as little as three months.

The opening of yuan retail services to foreign banks takes effect on Dec 11.