Employees promote wealth management products at a China Merchants Bank Co Ltd branch in Yichang, Hubei province. The Shanghai Interbank Offered Rate has remained low and yields on wealth management products have stayed flat this year. [Photo/China Daily]

While monetary easing has helped reduce liquidity pressures for lenders in China, market insiders and analysts said banks need to strengthen their management to avoid long-term risk as well as a repeat of last year's credit crunch.

The People's Bank of China's recent moves to launch targeted reserve requirement ratio cuts have helped release lenders' liquidity.

Recently, the Shanghai Interbank Offered Rate, a barometer of liquidity, has remained low, while yields on wealth management products have stayed flat.

"If you look at the (WMP) rate now ... you know that the money crunch is not going to repeat itself this summer," said Li Yuke, a 32-year-old interior designer, while perusing a website that gives information on yields for WMPs offered by hundreds of banks.

June 29 is usually a day on which few bankers sleep easily, because at the end of June, lenders must ensure they have sufficient deposits to pass regulatory inspections. Those inspections affect lenders' credit and profits throughout the year.

On June 20, 2013, the Shibor soared to a record 13.44 percent, raising concerns over the health of the Chinese economy and financial system.

"Some lenders defaulted in the interbank market, and almost every bank struggled to bridge the gap between too much lending and too few deposits. It was a nightmare," recalled Lu Cheng, a wealth product manager in Shanghai.

Analysts said that last summer taught the banking sector a lesson, and regulators and lenders alike have kept their eyes on the balance sheets and strengthened risk management.

The central bank has opted for selective easing aimed at specific sectors and targeted stable, lower interbank interest rates so far in 2014, according to Barclays Research.

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