SHANGHAI, (Reuters) – Sources told Reuters that some Chinese state banks such as Bank of China or Bank of Communications will reduce deposit rates on Monday to join smaller lenders.

These planned reductions come one week after regulators encouraged small banks to reduce the deposit rate ceiling. These moves coincide also with China’s Monday reduction of banks’ reserve requirements.

According to two sources, Bank of China is expected to reduce the rate for time deposits of 2 and 3 year tenors of around 10 basis points. Another source said that Bank of Communications would make similar moves.

Bank of China, Bank of Communications could not be reached for comment during non-working hours.

While it wasn’t immediately obvious if any other state banks including the Industrial and Commercial Bank of China, China Construction Bank (OTC), (CCB), and Agricultural Bank of China, will cut deposit rates too, sources indicate that these lenders usually move simultaneously on rate movements.

Beijing repeatedly called on banks to lower borrowing costs for small companies in an economic environment that has been hit hard by COVID-19, the fallout of the Ukraine crisis and capital outflows caused by U.S. tightening.

The PBOC announced that it will reduce the Reserve Requirement Ratio (RRR), for all banks, by 25 basis points effective April 25, in an effort to encourage banks to borrow more.

Rocky Fan from Guolian Securities stated that banks could reduce their lending rates by cutting down on deposit rates. This would encourage them to borrow less.

The main reason why banks won’t reduce loan rates is because they fear it will hurt their margins.

Fan said that lower deposit rates can also be beneficial for more efficient money use, which will help with investment and consumption.

Sources told Reuters that the People’s Bank of China’s interest rate self-disciplinary Mechanism, a high-ranking regulatory body, urged small lenders to reduce time deposit limits by around 10 basis points in mid-April.

According to sources, banks including China Zheshang Bank and Industrial Bank already have made this adjustment.