Yuan-denominated loans granted by mainland banks grew a robust 19 per cent last month from a year earlier, suggesting lenders are heeding Beijing's calls to stimulate the economy. Mainland banks extended 740 billion yuan (HK$839.31 billion) in loans in December, the biggest monthly rise since January last year, the Shanghai Securities News reported yesterday. The new loans started to rise from about 300 billion yuan monthly in most of last year to 476.9 billion yuan in November when the central government unveiled a 4 trillion yuan fiscal stimulus package and encouraged banks to help funding the toll road, railway, port and other projects under the scheme. 'Bank lending has been a key indicator. It's crucial to China's economy-boosting efforts. The December figure shows the needed credit expansion is on the way,' said Peng Wensheng, an economist with Barclays Capital Research. The mainland banking regulator said it had approved 105 new rural banks by the end of last year to expand a trial programme aimed at boosting lending to the country's 700 million farmers. These financial institutions have taken 4.28 billion yuan in deposits and offered 2.8 billion yuan in loans as of December 31, the China Banking Regulatory Commission said. Economists have welcomed the increase in new loans in November, but warned the boost may be short-lived after lucrative projects were quickly snapped up when the programmes were launched. But a bank source in the poverty-stricken southern province of Guizhou said it was still under pressure to boost lending. 'If we don't expand lending we will lose the job. If we increase lending, we'll be dead from a surge in bad loans in three years,' said the bank official, adding there were few promising projects available to local banks. Analysts have expressed concern some projects initiated by local governments may prove to be redundant programmes and a waste of investors' money. Citing unidentified sources, the newspaper said new yuan loans in 2008 totalled 4.88 trillion yuan, up from 3.63 trillion yuan in 2007. Loan growth in December 2007 was particularly weak because the central bank had clamped down hard on credit in an effort to slow investment growth and cap inflation. To support efforts to boost the economy, the central bank scrapped lending limits in early November and has cut interest rates five times since mid-September and lowered required bank reserves four times.