BEIJING (Reuters – Chinese financial regulators told some Chinese banks to extend more loans for property development to Chinese banks, two bank sources who have direct knowledge told Reuters. The move was made in an effort to ease industry liquidity.

China’s authorities have not publicly indicated that they would relax the “three Red Lines” financial restrictions that the central bank imposed last year on developers in order for them to be eligible to receive new bank loan.

However, lenders recently modified their lending practices in order to follow the new central bank guidelines of “meeting normal financing requirements” for the sector.

Sources from both a large bank and a bank in a major city said that the slightest relaxation of lending policies for developers would not affect the main principle that “homes should be used for living, not speculation.”

According to two sources, financial regulators told banks to speed up approval of loans for development projects and to make sure that there is positive growth in outstanding loan books related to project development in November, compared to October.

Due to the sensitive nature of the subject, both sources were not able to be identified.

People’s Bank of China and China Banking and Insurance Regulatory Commission did not immediately reply to our requests.

According to central bank data, the outstanding loans of banks for project development totaled 12.16 trillion yuan ($1.91 billion) at end September, up 0.02% over last year.

Data showed that quarterly growth in this type of loan fell by 2.8 percentage point from the second quarter.

Amid market speculations regarding possible relaxations of property loans, the real estate subindex of China’s mainland blue-chip index rose nearly 5% Friday.

On Monday, the sub-index was down 4%.

Bankers previously told Reuters that China would not change its policies regarding excessive borrowing by property developers, even though it made financial adjustments to assist home buyers and satisfy reasonable demand.

According to bankers, some banks expedited the disbursement for approved home loans in certain cities.

Zou Lan, a central bank official, stated last month that there was “misunderstanding” between lenders regarding the PBOC’s debt-control policy. This caused financial stress for developers.

Zou claimed that banks had to support new projects reasonable after existing lenders have repaid their loans.

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