China’s central bank has told the heads of the largest state-controlled banks to slow the pace of new lending , say people familiar with the matter, after new loan volume in the first half of the year tripled from same period a year earlier.

The pressure from the People’s Bank of China signals an unstated shift in policy and comes as it steps up its open-market operations to control liquidity and slow loan growth.

Over the past two weeks, China’s leaders have emphasised the country will adhere for now to its policy of “moderately loose” monetary conditions.

While there has been no formal change to what is an extremely loose monetary policy, the central bank and regulators have signalled an intention to rein in excessive lending through various policy announcements.

The PBoC has raised interest rates in recent weeks on its weekly sales of short-term bills in the inter-bank market and has ordered the most profligate lenders to buy set amounts of special low-interest, one-year central bank notes, increasing pressure on banks to toe the line.

Dorris Chen, an analyst with BNP Paribas, said: “The central bank is being forced to tread a fine line between forestalling a serious credit bubble and maintaining the overall easy monetary policy.”

Officials fear some of the Rmb7,370bn ($1,078bn) in new loans extended in the first half of the year has found its way into the bubbling stock and property markets, reinflating prices that had slumped in the global financial crisis.

China’s equity markets have become highly sensitive to any suggestion of restricted credit. At one stage in a trading session late last week, the Shanghai market fell almost 8 per cent on a rumour the two biggest state-owned commercial banks would cut new lending sharply in the second half.

They also worry that excessive lending in the midst of a slowdown will lead to large volumes of non-performing loans in the banking system.

After years of curbs on new bank lending, the government opened the gates late last year, telling banks to flood the economy with money to revive growth. Banks quickly exceeded the Rmb5,000bn full-year target for new lending set by Beijing at the start of the year.

China Construction Bank has told Bloomberg the world’s second-largest lender by market capitalisation plans to extend Rmb200bn of loans in the second half, down from Rmb709bn in the first half.

It is usual in China for banks to frontload lending in the first part of the year and extend much less in the latter half but a 70 per cent drop would be extreme.

The rival Bank of China and Industrial and Commercial Bank of China said they did not have targets for new loan growth in the second half but ICBC said it would “adjust lending in accordance with changes in economic development”.

In the first half, ICBC’s loans rose by Rmb826bn and BOC’s by Rmb902bn.

On Wednesday, the central bank hinted at shifting priorities when it said in a quarterly report it would carry out “market-based fine-tuning measures” while “unswervingly implementing the moderately loose monetary policy”.

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