Several Chinese city commercial banks and rural commercial lenders have cut their rates on a range of deposits this week, according to statements released on the banks' websites.
The smaller lenders followed in the footsteps of some of China's biggest state-owned banks, which implemented rate cuts earlier this month.
Peiqian Liu, China economist at Natwest Markets, noted the commercial banks' deposit rate cuts are part of the monetary policy transmission mechanism after the central bank cut key policy rates in August.
"This rate cut by commercial banks will help improve the profit margin slightly and is technically opening up more space for further (benchmark lending) rate cuts."
Four of the five of China’s largest banks, except for Bank of China, reported falling net interest margins (NIMs) in the second quarter.