Banks who require companies to maintain a minimum balance in their bank accounts are in violation of banking regulations and guilty of discriminating against small firms, according to China's central bank.

The Industrial & Commercial Bank of China and Huaxia Bank have set a minimum balance for small of 100,000 yuan (US$12,820), and the number is as high as 500,000 yuan (US$64,100) when it comes to the Bank of Communications and China Merchants Bank.

"All firms are entitled to open an account at any commercial bank under China's existing banking regulations," the People's Bank of China said in a report on its official website.

Minimum balance requirements force corporate clients to deposit more money. This is good for the banks but harms the liquidity of small businesses and makes it hard for them to engage in fair competition, said the report.

Commercial banks should provide fair financial services to their clients without attaching additional conditions, it noted.

The central bank said it would step up supervision to ensure the rules are not broken.
 
Since China opened its banking industry last December, domestic banks have staged a fierce battle to attract big lucrative clients. But they have not been courting small clients, either individual or firms, nearly as much.

(Xinhua News Agency January 20, 2007)