The behind-the-scenes reason for the "late" approval of interbank certificate of deposit quotas: it may be related to coordinated management with bank financial bond quotas

Interface News Reporter | Yang Zhijin

Interface News Editor | Wang Shu

As of March 24, the issuance quota for interbank certificates of deposit (CDs) by commercial banks has not yet been announced this year, whereas usually banks release their issuance plans and quota for interbank CDs in January or February.

Regarding this anomaly, industry insiders interviewed by Interface News believe that the registration method for interbank CDs may be adjusted, or it could be managed in conjunction with subordinated debt and perpetual bonds, as both share similarities in balance management. In the first quarter of this year, the net financing for both interbank CDs and financial bonds by commercial banks was below normal levels, indicating that approvals for both quotas have not been granted this year.

Typically Announced in January-February

Interbank CDs constitute the liabilities of commercial banks. However, unlike the “passive absorption” logic of traditional deposits, interbank CDs grant banks active issuance rights on the liability side, making them an active liability tool for banks.

According to the “Interbank Certificate of Deposit Management Interim Measures” established by the People’s Bank of China, the issuance quota for interbank CDs is subject to balance management, and the balance of interbank CDs issued by the issuer at any point within the year must not exceed the annual quota.

The aforementioned measures also state that banks should disclose their issuance plans for the year before the issuance of the first interbank CD. If there are significant or substantive changes during the year, the issuer must promptly disclose an updated issuance plan.

In recent years, commercial banks generally draft their interbank CD issuance plans (i.e., complete registration) at the end of the previous year or the beginning of the current year, then publicly disclose the issuance quota in January or February of the current year.

For example, Industrial and Commercial Bank of China disclosed its 2023 interbank CD issuance plan on February 3, 2023, with a total issuance quota of 784.8 billion yuan, and the document was dated December 27, 2022, indicating that it had completed the quota drafting and registration by the end of 2022.

Similarly, the interbank CD issuance plan disclosed by China Merchants Bank on February 28, 2025, shows a total issuance quota of 600 billion yuan for the year 2025. The document date was February 26, indicating that the plan was drafted and registered two days prior.

Interface News reporters compiled data based on enterprise warning systems.

Interface News reporters found that the registration quota for interbank CDs by commercial banks in 2025 is 33 trillion yuan, with an actual balance of 19.7 trillion yuan at the end of the year, corresponding to an interbank CD utilization rate (balance/quota) of 60%, a decrease of 10 percentage points compared to the previous year. Notably, the utilization rate among major state-owned banks has declined significantly. Due to tight quotas, major state-owned banks even rarely raised their registration quotas at the end of 2024.

Regarding the decline in the utilization rate of interbank CDs in 2025, Lin Yingqi, Director of the Research Department at CICC and a banking analyst, analyzed for Interface News that the first reason is the increased liquidity injection by the central bank through tools like MLF and reverse repos, leading to a relatively ample supply of funds; secondly, due to policies for repaying overdue corporate debts and economic recovery, cash flows for enterprises and households have improved, alleviating pressure on banks’ liabilities; thirdly, the capital market is active, with funds flowing into the stock market, forming non-bank deposits for large banks.

“From the liability side, last year, the structure of large banks’ liabilities improved significantly, reflected in the rebound of low-cost demand deposits and the decline of high-cost time deposits, resulting in an overall reduction in liability costs,” Lin Yingqi told Interface News.

Possible Consolidation with Financial Bonds

Given the large issuance scale of interbank CDs and their significant impact on market liquidity, the registration quotas for interbank CDs have garnered considerable market attention. According to iFinD data from Tonghuashun, the issuance scale of interbank CDs reached 33.8 trillion yuan in 2025, accounting for 38% of the total issuance scale of various bonds in the bond market.

However, as of March 24, commercial banks, including state-owned and joint-stock banks, have yet to disclose their 2026 interbank CD issuance plans, nor has the quota for that year been revealed. Several market participants interviewed by Interface News believe that the reason may be that the registration method for interbank CDs could be undergoing adjustments or could be consolidated with financial bond management.

A research report from Tianfeng Securities states that it is possible that this year’s interbank CD registration quota mechanism may undergo moderate reforms, such as merging the interbank CD registration quota with the bond issuance quota, while separately setting quotas for capital supplement tools and interbank CDs.

“On one hand, last year’s utilization rate of interbank CD quotas was relatively low, and on the other hand, the issuance progress of interbank CDs and bank financial bonds this year has been slow, with net financing being negative for both, indicating that both may be affected by the same factors. The quotas for interbank CDs and financial bond issuances are likely to be managed and reviewed together,” a chief analyst in the banking sector from a leading brokerage firm told Interface News.

According to iFinD data from Tonghuashun, from 2021 to the first quarter of 2025, the net financing of commercial banks’ interbank CDs and financial bonds has generally been positive, but in the first quarter of this year (as of March 24), both were negative, at -129.7 billion yuan and -13.63 billion yuan, respectively. This is due to the small scale of new issuances of interbank CDs and financial bonds, but a significant amount of maturities.

Interface News reporters created graphics based on data from Tonghuashun iFinD.

“The main reason is that regulatory authorities have not approved new quotas for bank financial bonds, resulting in the issuance scale of bank financial bonds being far below normal,” said a chief fixed-income analyst from a large brokerage firm in Shanghai, as reported to Interface News.

Commercial banks’ financial bonds include special financial bonds (such as green financial bonds, technology innovation financial bonds), TLAC non-capital debt instruments, subordinated debt, perpetual bonds, and other types, with the latter two being the main types.

According to Interface News’ analysis, the issuance quotas for subordinated debt and perpetual bonds are approved by the People’s Bank of China and the Financial Regulatory Bureau, respectively, but there is no fixed approval or disclosure timeline. Generally, the approved quotas for subordinated debt and perpetual bonds are valid for 24 months, during which banks can independently decide on the timing, batch, and scale of issuance.

“From past issuance experiences, commercial banks typically exhaust their quotas for subordinated debt and perpetual bonds within a year after receiving approval, rather than waiting until the end of the two-year validity period. Essentially, the actual effective period of the quota is also one year, similar to interbank CDs, indicating that the two can be managed together,” the aforementioned chief fixed-income analyst from a large brokerage firm in Shanghai stated to Interface News.

The aforementioned chief analyst from a leading brokerage firm in the banking sector indicated to Interface News that aligning the quotas for interbank CDs and financial bonds for consolidated management would help commercial banks better coordinate their overall capital supplementation and active liability management throughout the year, enhancing the efficiency of banks’ asset-liability management.

“As a liquidity adjustment tool, there is still objective demand for interbank CDs, but it may not be as large as before, as the issue of deposit-loan spread (rapid deposit growth but slow loan growth) remains relatively serious for commercial banks,” an anonymous banking expert told Interface News.

Data from the People’s Bank of China shows that by the end of February this year, the growth rate of deposits in financial institutions was 8.7%, exceeding the growth rate of loans by 2.8 percentage points. Looking at a longer timeframe, since last April, the growth rate of deposits in financial institutions has consistently been higher than that of loans, indicating insufficient loan demand from financial institutions, which to some extent reduces commercial banks’ demand for interbank CDs, subordinated debt, and perpetual bonds.